About 38 million Chinese stopped contributing to their pension insurance in 2013, accounting for more than 10 percent of the employees who have joined the pension program. The number has revealed serous problems in China’s pension system.
According to the news from China’s state media, around 30 million gave up pension insurance each year since 2011. The reasons behind this big drop in numbers are due to the social security system.
According to China's social security system, one cannot transfer pension insurance between provinces or cities. Thus, many migrant workers have to discard their pension insurance when they move back home.
Some say they stop pension contributions as they have made contributions for 15 years, the minimum period to be eligible to claim a pension.
China’s pension system has been a complaint over the years as many Chinese find it unfair and inefficient. For example, those who work in the public sector are exempt from the pension system. Their pensions are paid for by all taxpayers rather than their own previous payments. Their payment level is much higher than that of the social pension system.
China’s ageing population has also contributed the problem. According to a research report by the Chinese Academy of Social Sciences, by the end of 2011 more than 2 trillion RMB in the personal pension account was transferred to pay retirees. This year, many opposed the government's decision to postpone the retirement age from 60 to 65 in order to fill the financial gap.
The 38 million figure has again triggered public anxiety about the pension system. Netizen “Chen Yuandao” lamented:
To be honest, when I started working, I had the idea (of giving up the pension). After all, I do not trust the government. There are more older people than young ones, the prices have gone up, no to mention the corruption. Who knows how many years I will have after retirement, the government just wishes you to have a short life.
Another netizen “Liu Daniang” calls for[zh] the reform of the pension system:
38 million people have given up their pension, it’s not their fault, it’s the government’s fault. The government tries to ask ordinary people to pay the gap by postponing the retirement age. The government’s financial capital doesn’t benefit the majority of people, but the minority insiders within the system. The fact that 38 million have given up the pension will facilitate the reform of the social pension system.
Sina news created an info graphic comparing paying a pension with saving money in a bank account. However, Professor Lang Xianping from HK University believes relying on bank saving is not the best way. He introduced the American pension system in his blog:
In fact, I have been calling for our government to face the pension problems. We shouldn't just learn the superficial about Americans, but learn from the American soul. American people don't put their life savings in the bank, but into social security taxes, 401K plans, and individual retirement accounts. They “deposit” on the stock market there in three ways. How much money? A total of $17.9 trillion (US dollars), 1.19 times the U.S. GDP in 2011. The money is the American people's deposits, with savings and stock market investments interacting positively. The more pension deposits, the more stocks rises; as the stock market rises, the more pensions rise. This way Americans have a sense of security about their retirement fund.