Open market to raise pensions

Statistics show that the number of working people paying into China's social insurance program has reached 459 million, with 125 million people in rural and urban areas currently receiving the pension.

The social security authority has indicated it will begin to set the amount of the pension based on commodity prices and local cost of living.

If the link can be established, the lowest monthly basic pension of 55 yuan ($8.73) for rural senior citizens will certainly be increased from its current symbolic level to a more functional amount. If people are assured that pensions will rise, China's high saving rate will drop and a considerable amount of deposited money will be spent in the market, which is badly needed in China's transformation of its economic growth model.

The new leadership of the Communist Party of China strives to meet the people's interests. It requires the government at various levels to increase its input in public welfare to constantly improve people's livelihoods in line with changing commodity prices.

There has already been established a nationwide social security network, which provides the government with a solid foundation to bring more benefits to the people.

The most efficient way to provide the best public service in China is to combine the governments' efforts with the market's participation. The authority provides a basic pension system, while the commercial insurance agencies should be permitted to enter this field to meet the various demands of different customers who are looking for a more diverse portfolio of pension services.

As China's society is aging fast, the pension gap will become wider and wider. It is necessary to open this market for commercial insurance agencies to supplement the authorities. The government should also save the administrative costs and divert the limited financial resources to the most needed areas of public welfare. The aging society harbors huge potential for the development of relevant service sectors, which is actually conducive to promoting the transformation of the country's economic structure.

Translated by Li Yang from 21st Century Business Herald