China will launch a pension insurance program on a trial basis for unemployed urban residents on July 1, 2011. The General Office of the State Council released guidelines for the trial program yesterday.
The trial will initially be implemented in 60 percent of the country's urban areas, and is planned to extend to the rest of the nation's cities and townships by the end of 2012.
The more one pays, the more one gets
According to the guidelines, all unemployed urban dwellers over the age of 16, excluding students and employees covered by the basic pension program, are eligible for the pilot pension insurance program.
Funding of the pilot program is made up of two parts: government subsidies and personal contributions. Individuals can choose from 10 categories of personal contribution packages, ranging from 100 yuan to 1000 yuan annually.
Local governments are allowed to increase the number of categories depending on practical situations, and urban residents have the right to choose their own. The more one pays into the pension program, the more one will get after he or she reaches 60.
The guidelines also suggest the central government and local governments should subsidize the unemployed city population, and encourage other organizations or individuals to offer financial aid.
Monthly pension begins after age 60
According to the guidelines, the program will benefit insured residents as long as they live. Insured residents over the age of 60 will be able to receive a basic monthly pension of 55 yuan. For those who pay personal contributions for extended periods of time, the government would raise the basic level of monthly pension accordingly.
Urban residents who reach age 60 when the pilot program goes on trial do not need to pay any fees and can directly join the program. As the pension program normally takes effect only after the insured residents pay fees for over 15 years, those over 45 can pay the fees until they are 60 years old or pay off the rest once and for all, then enjoy the same benefits of the program.
Apart from the basic pension, the money in personal accounts will be divided by 139 (a basic index in pension programs) and then go into to the hands of these individuals on a monthly basis. This money is a personal asset and can be inherited by their heirs.
Pilot program aims to build a security net for everyone
According to statistics released by the Ministry of Human Resources and Social Security, there were 257 million employees and 143 million rural residents who joined a pension program by the end of 2010.
This pilot pension insurance program will benefit at least 30 million more urban dwellers by 2012, and is part of the government's effort to build a social security net for all people.
China launched a similar rural pension program in 2009. Under that system, residents in rural areas can receive a monthly pension of at least 55 yuan after they reach 60 years of age.
