Workers will retain the accumulated amount of their pension fund even if their accounts are transferred to another province or region, says a draft law.
The draft social security law, submitted to the National People's Congress (NPC) yesterday for second reading, calls for unifying pension funds across the country so that individuals' accounts can be transferred and renewed anywhere.
The pension fund clause was added to the draft law after the first reading by the country's top legislature.
Under the existing social security scheme, a person's contribution to the pension fund increases with the number of his/her working years. But the contribution is stopped and reverted to the starting level the moment a person leaves a job to work in another province or region.
The proposal is important for the country's more than 200 million migrant workers, many of who are reluctant to join the pension scheme because they frequently change jobs.
The transfer of pension account has become "an acute problem, limiting the development of social insurance", said Sun Bolin, deputy director of the law committee of the 11th NPC Standing Committee.
It has also prompted many migrant workers to withdraw their pension contributions before shifting to another place for work, Sun said.
Though trial sites for social security account transfers have been set up in 13 provinces, some local governments have consistently refused to transfer migrant workers' pension in full.
"The reason is very simple: the more migrant workers retire in any one place, the more the local government has to pay in retirement welfare," a People's Daily report said earlier.
While some analysts attribute the problem to the decentralized structure of the existing pension scheme, the revised draft law clarifies that governments at county level and above have to offer budgetary support where necessary.
Furthermore, it says that while the State "implements strict supervision" of social security fund, county and higher-level governments "should take steps to encourage and support all social forces in supervising social insurance".
The State Council, the country's Cabinet, has vowed to unify the pension pool at the national level by 2012 despite the inherent challenges.
Yang Yansui, a professor in Public Administration School of Tsinghua University, said provincial-level management of social security funds has failed to unite agencies, people and resources. And building a unified system is the most urgent task.
(China Daily December 23, 2008)