What Are the Pros and Cons of a Commutation of Pension?

The pension replacement rate refers to the ratio between the level of receiving pensions at the time of retirement and the level of wages before retirement. It is one of the basic indicators for measuring the difference in living security before and after retirement. Pension replacement rate is an important part of a country or region's pension insurance system. It is an economic and social indicator that reflects the living standards of retirees.

Pension replacement rate

The pension replacement rate refers to the ratio between the level of receiving pensions at the time of retirement and the level of wages before retirement. It is a measure of labor security before and after retirement

The specific value of the pension replacement rate is usually obtained by dividing the "average pension of new retirees in a certain year" by "average wage income of employees in the same year". For example: the average pension received by new retirees in a city in 2002 was 650 yuan / month, and the average salary income of serving employees in that city was 1100 yuan / month, then: the replacement rate of pensions for retirees in the city in 2002 It is (650 ÷ 1100) × 100% = 59.09%.

The replacement rate can be calculated at different levels. It includes: the ratio of the pension of an individual when he retires to the wage and income of the employee on the job; the ratio of the average pension of an enterprise retiree to the average salary of the employee in the company; The ratio of the average salary of employees; the ratio of the average pension of regional retirees to the average salary of employees in the region; the average of national retirees

The retirement pensions for the personnel of government agencies and institutions in China and the retirement pensions for the employees of enterprises adopt two completely different systems. Specifically speaking, there are three differences: First, the overall planning method is different, that is, the enterprise personnel are paid by the unit and the employees themselves according to a certain standard, and the institutions and public institutions are financed by a unified fund; the second is that the payment channels are different, that is, the enterprise personnel are Funds are paid on account, while the institutions and institutions are paid by the government. Third, the standard of enjoyment is different, that is, the pension standards of institutions and institutions are much higher than the retirees of enterprises, and the gap is about 300% to 500%.

The replacement rate of retirement income for government staff has far exceeded 80%, and according to information disclosed online, it is as high as 92% -107%. but,

Factors that affect the replacement rate of pensions: standard pension plans; personal income and total wages paid by enterprises; years of work and contributions; retirement age, etc.

Multi-party attention

Prior to 1999, the replacement rate for employee pensions in Chinese enterprises remained at 75

The overall goal of China s future pension replacement rate adjustment should first be to ensure that the basic living needs of urban retirees and rural elderly are met; at the same time, based on economic development, and within the limits of a reasonable fiscal burden, the standards of pension replacement rates should be appropriately increased. To allow retirees and working staff to share development results; gradually reduce the stratification gap in the level of pensions and achieve social equity. According to this, in the future, China should follow the following principles to adjust the pension replacement rate:

National Economic Netizen Jia Wenhe issued a view: "Dual-track" reform is the key

The topic of supporting the elderly in all sectors of society is increasing. Earlier media reports on pensions in several provinces and municipalities failed to make ends meet, and then there was a discussion of whether the labor force fell for the first time and whether the demographic dividend has disappeared. Countless "bricks" from netizens. On September 10, another news broke into the public eye: Chu Fuling, director of the Department of Social Security of the Central University of Finance and Economics, calculated that in 2011, the replacement rate of China's corporate pension was only 42.9%, which was lower than the international warning line (55%).

Pension replacement ratio, that is, the ratio of retirement wages to income. It is not only related to the vital interests of retirees, but also closely related to the operation of the entire basic pension insurance system. As the key point of the entire old-age insurance system, whether the replacement rate level is reasonable reflects the arrangement of the entire system and the policy orientation. Undoubtedly, the reality that China's pension replacement rate is lower than the warning line urges that the "pension problem" must find a solution.

Pensions can enter the market or delay retirement. There are many reasons and benefits are complicated. It looks like a mess, so we need to pull the cocoon, of which the current "double-track system" of pensions is the "thread head". Breaking the "dual-track system" of pensions has a solid public opinion basis and strong real needs. At the beginning of 2013, the state once again raised the basic pension level of enterprise retirees and realized the "nine consecutive increases" in pensions. Although the state raises pensions for retired employees of enterprises every year, compared with the pensions of government agencies and institutions, the disparity in pension disparities remains outstanding.

It should be acknowledged that just as the salaries of working staff cannot be exactly equal, there must be some differences in the pensions of retirees. However, the "dual-track system" of pensions is a system of injustice, which forms an artificial "gap" between different social groups. This not only exacerbates the inequity of corporate retirees, it is also not conducive to the formation of social cohesion to cope with the problem of pensions brought about by the "aging tide".

Pension "combination" is to reform the "fragmentation" of the social endowment insurance system and establish an integrated social endowment insurance system. Although this will face difficulties in coordinating the interests of the groups, the staff of the public institutions worry that the treatment will be reduced, the connection between the old and the new systems will not be easy, and institutional obstacles will make it difficult to equalize water. However, the focus of the reform is to break this solidified interest Restrictions on groups, the elimination of the "self-fertility by power" mechanism, and the courage of "no matter whether it is a minefield or a mighty abyss, will go forward" cannot be achieved.

Not having widows but suffering from unevenness, this psychosocial tendency has existed for more than two thousand years. Under the background that the ideal of the Chinese people is to stay on the result of gaining wealth (average wealth), instead of focusing on equality of opportunity and rights, the "combination" of pensions is in line with the consensus of most people today. Lin Yifu, Honorary Dean of the National Development Research Institute of Peking University, predicts that by 2020, China's per capita income level will likely reach $ 12,700. According to the United Nations or World Bank indicators, it will be a high-income country. ^[3]