People's Daily in staunch defence of pension scheme skewed towards public servants

PUBLISHED : Friday, 10 January, 2014, 9:46am
UPDATED : Friday, 10 January, 2014, 10:21am

The Communist Party's flagship newspaper upheld the mainland’s “dual-track pension scheme” -- where public servants get more retirement benefits than those in the private sector  -- amid heated debate over the system.

“'Public servant' is a position that is able to wield considerable administrative power. Dwindling pension benefits will risk hindering their initiative and diminishing their integrity,” read a commentary on People’s Daily published on Wednesday.

“Qualifiers of public servant positions often have higher educational backgrounds that arise from longer years of education and more tuition fees, so isn’t it unfair as well [not to] discriminate the pension fee between them and blue-collar workers?” the article argued.

The appeal echoed an article the paper ran earlier this week that scrutinised the pension schemes practiced in the United States, Germany, Japan and Hong Kong, arguing it is a common approach elsewhere in the world for government employees to enjoy favourable pension benefits than others in the private sector.

'Public servant' is a position that is able to wield considerable administrative power. Dwindling pension benefits will risk ... diminishing their integrity
People's Daily newspaper

Under current system in China, government employees do not need to contribute to the funds pool during their working years, but they enjoy a payment between 70 per cent and 90 per cent of their salaries after retirement, depending on how many years they worked.

In sharp contrast, private enterprise employees need to contribute 8 per cent of their monthly income towards pensions, but only receive a little more than half of their average wage level when they retire. The disparity between the two groups earned the system a nick name of “dual-track pension scheme” and has divided public opinion.

The People's Daily statement came amid public calls urging the government to have its employees also contribute to the pension pools so as to address a system they feel is imbalanced.

While its supporters maintain that civil-service staff deserve better pension payments as they earn lower salaries than businesspeople and other private-sector employees, many critics have asked to abolish the current pension system.

Responding to the call, the government has promised to reform its pension scheme and vowed to eventually put its employees under a unified system with private entrepreneur workers, but is has yet to set a timetable for it.

In an effort to address the concerns, the central government on Wednesday announced it would raise the average monthly retirement benefits of private company employees to 1,893 yuan (HK$2,403), up 10 per cent from a year ago. Over 74 million people around the nation will benefit from the raise. This has been the ninth consecutive raise over the past nine years. 

Nonetheless, the latest retirement benefit rates for the private sector is still only one-third than their civil service peers, according to Economic Observer.