Towards Universal Coverage: A Macro Analysis of China’s Public Pension Reform

Abstract

Since the mid-1990s, China has undertaken an overhaul of its social security system, which was one of the essential elements in a market-oriented economic reform and social transition process. In the early 1990s, pension reform was primarily confined to urban workers, particularly to those employed in state-owned enterprises (SOEs), leaving a large number of workers in the informal sector and rural areas outside the social protection system. In 2006, central government announced for the first time a goal for social security development — to achieve full coverage in urban and rural areas by 2020. Following on from this, several public pension pilot programmes have been initiated in recent years, including a pension reform pilot for public service units (PSUs) in 2008, a new rural pension plan in 2009 and an urban residents’ pension plan in 2010. As a result, China has constructed a multi-plan framework for old-age protection which has the potential to include all types of groups constituting the labour force. At the end of 2010, it was estimated that about 360 million insured, representing 39 per cent of the labour force, were covered by one of three public pension programmes: (1) the pension scheme for urban workers (236 million, 25.7 per cent); (2) the new rural pension scheme (103 million, 11.1 per cent); and (3) the pension scheme for government workers and those working in PSUs (21 million, 2.3 per cent) (MOHRSS 2011; Ma 2011).