Writter's own choice (Pension Reform in China)

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Pension Reform in China
Introduction
According to a report by Hu Slater (2011), China faces significant challenges since the economy of the country is entering into a transitionary period. The Chinese government understands that as the country heads towards economic growth that is driven domestically, and away from the dominant exports and heavy industry, there will be a need to significantly develop the social welfare system. Pension reform and comprehensive welfare system is required since OECD countries are still below par. However, there are several reasons for the government to reduce the disparity between rural and urban registered workers. Over the recent past, labour mobility has been on the rise and this has had a huge impact on social cultural issues with the support networks of traditional family being unable to fulfil the welfare role they performed in the past. This document critically analyses different aspects of pension reforms and its impacts on social and cultural change in China today.
There are two major challenges which the pensions program in china faces. First, only a fraction of the population is covered by the current system, while the structure of the system still fails to function as intended (Clarke, 23). Second, the population across the world is aging at a rapid rate, with the ratio of 65 year-olds to those aged between 15 and 64 years, which at the moment is 11%, expected to reach 38% by 2050. High technological innovation and quality health care systems have increased the lifespan of people implying that the dependency ratio will definitely increase as percentage of the aged population increases (Barr & Diamond 45). Experts argue that this will have a severe impact on the working class as well as the economy at large thus impacting negatively on the sociocultural lifestyles of the society. The pension reform plan is yet to be successful in addressing various challenges which people faces taking into consideration that only a minor segment of the population has been covered.
In 1990s, the government established the multi-pillar system which contained the individual fully funded accounts to supplement the basic pension which accounted for 20% of the average urban wage. However, these accounts are almost empty since the contributions have already been used to pay the current pensioners. Experts say that despite the fact that rural employees account for the biggest percentage of workers, the level and coverage of their pensions is very low. The Chinese government recognizes this fact and this prompted it to issue a new plan in 2009. To address people’s social welfare, several experts have come up with propositions which the government can undertake to ensure that the quality of life does not worsen in the future. Oksanen (2) believes that Chinese authorities should adopt a pension reform system that addresses the needs of the urban and rural populat...