Reform aims to make pension system ‘fair’

The State Council on Wednesday revealed details of a reform of China's pension system, under which civil servants and employees at public institutions are subject to the same pension scheme as employees at enterprises, according to a statement posted on the central government's website.

The reform aims to build a "fair" social security system in the country, it said.

The new pension system, which puts an end to the long-standing "dual-track pension system", has taken effect nationwide since October 1, 2014, said the statement.

Media reports said in December that under the new system, some 7 million people who work for government agencies and 30 million for public institutions will pay for their pension for the first time.

According to the new measures, employees will pay 8 percent of their monthly salaries toward endowment insurance, while their employers will pay 20 percent of the employee's total salary each month as a premium.

The previous pension system was introduced in the 1990s. Under it, people working at government agencies and public institutions were not required to pay into any pension fund, and upon retirement they could get pension amounting to nearly 70 percent of their salary, which could rise to 80 percent for senior professionals, media reports said.

The pension for public employees was covered by the government's fiscal revenue under the previous system. Employees at State-owned and private companies had to pay 8 percent of their salary, but received a lower pension on retirement.

The system was criticized by many for its apparent unfairness.