Special Report: No.1 Document Targets Rural-Urban Development |
China is taking another step to expand its pension system, with the launch of a trial scheme in certain parts of the country. The eventual aim is to allow 700 million people living in rural areas to get the same payouts as retirees in urban areas. The move is part of ongoing efforts to reduce the gap in living standards between cities and the countryside, while also boosting consumption by tapping a potentially huge market in China's rural areas.
The trial rural pension plan covers 10 million farmers in 27 provincial level administrative regions, and will expand to cover the whole country by 2020. Rural residents over 60 will receive a monthly allowance of varying amounts set according to average income levels specific to their areas. But each person will receive at least 55 yuan per month.
Yin Weimin, Minister of Ministry of Human Resource & Social Security said "The move is a milestone in building China's social security system. It is a big step forward in efforts to establish a social security system which will cover both rural and urban areas."
The system is funded by farmers themselves, collective benefits and government subsidies. An older system started in 1990, was funded entirely by farmers. But the biggest obstacle in the new scheme is insufficient revenue in local governments. But the central government is stepping in with aid, with a total of 3 billion yuan in subsidies to local governments.