Have you ever sat on the balcony with a cup of hot tea and thought about retirement in your spare time? You may imagine that retirement is a walk in the park with your wife and children, or a laughing and playing with your grandchildren, but behind all this beauty, there is an inevitable reality in front of you - that is, pensions. Today, let's talk about China's pension insurance system, especially for the elderly friends born between 1954 and 1964, after 10 years of pension merger, your pension has risen or fallen?
First, let's review China's two basic pension insurance systems. On the one hand, there is the basic old-age insurance for urban workers, which is mainly for the staff of enterprises, government agencies and institutions. On the other hand, there is also the basic old-age insurance for urban and rural residents, which is set up for those residents over the age of 16 who have not participated in the old-age insurance for urban workers. Although the purpose of these two systems is the same, both are to ensure our old age, but they are different in details.
For example, in terms of payment grades, the pension insurance for urban workers is divided into three grades: the lowest, the middle and the highest, while the pension insurance for urban and rural residents is set up with a minimum and a maximum limit, with a total of 15 grades. As for pension benefits, data from 2022 shows that the average monthly basic pension for urban workers is about 3,600 yuan, while that for urban and rural residents is about 204 yuan.
Next, let's talk about how pensions are calculated. The pension of urban retired workers is composed of three parts: basic pension, personal account pension and transitional pension. For urban and rural retirees, pensions include basic pensions and personal account pensions.
Having said all this, let's take a look at the pension merger. As you may recall, before October 2014, China implemented the so-called "dual-track system". However, since January 2015, the pension system has undergone important reforms. The transition period for this reform was set at 10 years in order to find a balance between the old and new regimes.
During this transition period, retirees are divided into three categories: "newcomers" refer to those who retire after 2024, "middle-ages" refer to those who retired between October 2014 and October 2024, and "seniors" refer to those who retired before October 2014. This classification is crucial to understanding the changes in pensions.
Let's take a look at this change with an example. Suppose there is a staff member A in an agency who retired before the reform. According to the calculation method at that time, his pension may mainly consist of a basic pension and a personal account pension, plus a part of the transitional pension. However, after the pension consolidation, the staff member's pension may be adjusted, as the new calculation may be different.
The core purpose of the implementation of the pension merger policy is to achieve the fairness and justice of the system. What does this reform mean, especially for our group of older people born between 1954 and 1964? First of all, it means a uniform way of calculating pensions, which to a certain extent reduces the disparity in treatment between different groups. For example, in the past, the pension gap between urban workers and urban and rural residents was large, but after the merger, this gap is expected to gradually narrow.
However, we must also recognize that merging is not a one-and-done solution. The impact is different for retirees of different ages. In our age group, for example, since most of us were retired before the reforms, pensions were calculated mainly according to the rules of the past. But after the merger, there may be some adjustments. For some, this may mean an increase in pensions, while for others, a decrease may be faced.
Here I would like to illustrate this with a concrete example. Let's say we have a retired employee B who was born in 1958. Under the old system, his pension could consist mainly of a personal account pension and a basic pension. However, after the merger, this calculation may be changed, and his pension may be increased depending on the number of years he has paid and the amount of contributions. This is the positive impact of the reforms.
However, we should also be aware that the implementation of the merger policy is not without its challenges. For example, for some low-income groups, they may feel that their pensions are not growing as fast as expected during the transition period. This will require all of us from all walks of life to work together to ensure that the reforms reach everyone in a more balanced way.