In late December 2009, the Chinese State Council decided to implement nationwide as of 1 January 2010 “The Provisional Measures on Transfer and Continuity of the Basic Old-age Pension Relationship concerning the Urban Enterprise Workers”, a document which was formulated jointly by the Ministry of Human Resources and Social Security (MoHRSS) and the Ministry of Finance in an effort to enhance interregional labour mobility.

According to the document, when an insured person moves to work in another province, the social insurance agency of the place of origin should issue a certificate for participation in pension insurance and the person’s pension insurance relationship should be transferred to the place of destination.

Such a transfer includes the total individual account accumulation as well as 12 percent (instead of 20 percent based on the payroll) employer contribution which will finance the pooling part of the basic pension. The rest 8 percent employer contribution is retained by the social insurance agency in the place of origin for the purpose of maintaining social insurance fund equilibrium and avoiding local pension fund shortfall.

Upon fulfilling the pension eligibility criteria, the pensioner’s years of contributions in various places will be duly taken into account in calculating the benefit (composed of both the pooling part and the individual account benefit). If the pension relationship is outside the pensioner’s place of household register, and he/she has contributed to the local pension fund for an accumulative total of more than ten years, he/she can apply to receive pension benefit locally.

In the case of less than ten years, the relationship will be transferred to the previous place where the pensioner had contributed for more than 10 years and will receive the benefit. If none of the accumulative contributions in the relevant places exceeds 10 years, the relationship together with the relevant funds will be transferred to the pensioner’s place of household register where he/she will claim pension benefit.

Farmer-turned domestic migrant workers are no more allowed to withdraw their individual account savings (hence sever their insurance relationship) when they move to work in another place or return to home villages. Their insurance relationship and contribution records will be maintained properly by the relevant social insurance agencies. Upon fulfilling urban pension eligibility, they will be entitled to the same pension benefit as their urban peers. In certain circumstances, such a relationship and the fund may also be transferred to the new type of rural social pension scheme.

According to MoHRSS, a total of 234.98 million people (including retirees) had participated in the basic pension scheme for urban enterprise workers by the end of 2009, an increase of 16.07 million or 7.3 percent over the previous year. The provincial pooling of pension schemes had been implemented in all of the 31 provinces in mainland China, and the government is eyeing a national pooling by 2012. Meanwhile, experts believe that the newly launched government-subsidized new farmers’ pension scheme had covered more than 11 percent of rural areas by the end of 2009, and may be extended to all farmers nationwide within five years from now instead of the target year of 2020.

Source: (in Chinese): http://www.gov.cn/zwgk/2009-12/2009-12/29/content_1499072.htm http://news.ifeng.com/mainland/201001/0122_17_1521986_1.shtml; http://news.cnwest88.com/s/2010-01-08/5a81b111-c739-655b-ae40-29efcae7001a.html

Reference: “The Provisional Measures on Transfer and Continuity of the Basic Old-age Pension Relationship concerning the Urban Enterprise Workers.”

Implementation date: 01.2010