China to merge urban, rural pension plans to encourage labour mobility
BEIJING (REUTERS) - China will merge its pension plans for rural and urban residents, the government said on Friday, a change that encourages labour mobility but does not address other deeper problems in the system.
The change will improve social security, allow workers to move around the country for the best job prospects, and buoy domestic consumption in the long run, the government said in a statement after a cabinet meeting.
But the reform does not tackle bigger challenges plaguing China's pension system, such as unequal payouts that have bred resentment, and a funding shortage that some economists say will be as big as 68 trillion yuan (S$14.2 trillion) by 2033.
China's highly fragmented pension system was previously loosely divided into four categories: for civil servants and state officials, for workers in the private sector, for non-employed urban residents and for rural residents.