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Saving Farmers’ Pension

Feb 27-2019   



Many young farmers have joined the rural pension system and opened their personal pension accounts; however, they tend to opt for lower rungs of contribution and will not be able to support themselves in retirement, argues NSD Prof. Lin Shuanglin in his latest article for a Chinese newspaper. Policies vary around the country and contribution to personal pension account starts at a meager 100 yuan per year in many regions. The government tops up 30 yuan annually. Alongside personal pension accounts, the government offers basic pension accounts whose aim is to provide minimum safeguard. Prof. Lin says that rural disposable income per capita had grown from 2,253 yuan in 2000 to 12,363 yuan in 2018, and if contribution were set at 8%, same as urban employees, the annual contribution should be 989 yuan. He refers to the pension system in the US, which required contribution of 10.16% (evenly split between employer and employee) of income in 1980 and 12.4% since 2013. As China’s population ages and rural population declines, Prof. Lin urges strengthening personal pension accounts by raising contribution rates, offering minimum return (e.g. investing in government bonds), ensuring transparency and giving farmers freedom to create more wealth.

 

Saving Farmers’ Pension

Feb 27-2019   



Many young farmers have joined the rural pension system and opened their personal pension accounts; however, they tend to opt for lower rungs of contribution and will not be able to support themselves in retirement, argues NSD Prof. Lin Shuanglin in his latest article for a Chinese newspaper. Policies vary around the country and contribution to personal pension account starts at a meager 100 yuan per year in many regions. The government tops up 30 yuan annually. Alongside personal pension accounts, the government offers basic pension accounts whose aim is to provide minimum safeguard. Prof. Lin says that rural disposable income per capita had grown from 2,253 yuan in 2000 to 12,363 yuan in 2018, and if contribution were set at 8%, same as urban employees, the annual contribution should be 989 yuan. He refers to the pension system in the US, which required contribution of 10.16% (evenly split between employer and employee) of income in 1980 and 12.4% since 2013. As China’s population ages and rural population declines, Prof. Lin urges strengthening personal pension accounts by raising contribution rates, offering minimum return (e.g. investing in government bonds), ensuring transparency and giving farmers freedom to create more wealth.