Is It Time to Reform the Dual-Track Pension System？

　　Civil servants’ pensions is an issue that has long been debated in China. In spite of the fact that pensions for enterprise employees have been rising continuously for the past seven years， their benefits are much lower than that of their civil servant peers. There exists an increasingly widening gap between civil servants’ pensions and those of other workers.

　　Recently， the microblog account of the newspaper People’s Daily published an article， which says that civil servants’ pensions surpass those of enterprise employees in many countries around the world. The article cited examples in Germany， the United States and Japan. It stirred up a strong reaction from readers， with many expressing their dissatisfaction with China’s existing dual-track pension system. The following are excerpts of the opinions：

　　Tangjiweide (www.eastday.com)： China’s dual-track pension system has led to income gaps between civil servants and enterprise employees. Meanwhile， one thing that is often neglected is that income gaps between civil servants themselves also exist. Officials have higher incomes than those working at a community level， and civil servants in different jobs and regions also have different salaries.

　　Recently， many community-level civil servants have made their incomes public on the Internet， which shows that most of them do not enjoy the high salaries others have assumed they do. Generally speaking， those who can pass the civil servant examination tend to have a good education background， which is equal to a huge investment in their own education. Therefore， it seems unfair to pay them pensions at the same level as ordinary workers， most of whom didn’t need to invest as much in their education.

　　Civil servants working at the community-level have a relatively low salary. Compared to staff at enterprises， most civil servants are paid less. However， the situation will change when they retire. The high pensions enjoyed by civil servants tend to be blamed for social inequality. Nevertheless， civil servants also feel unsatisfied. They argue that people focus too much on their relatively high pensions， but choose to neglect the high payments received by managerial personnel and technical workers in both state-owned or private enterprises.

　　Some civil servants at the community level might even feel angry， as they have to deal with the most trivial yet heavy work， even though they are often paid the least in the whole civil servant team. As for these people， it is proper to offer them a high pension. What society feels unhappy about may be the government officials in possession of important resources and power， but who contribute little to society and are also guilty of engaging in corruption. People’s anger at civil servants’ high pensions mainly targets these officials.

　　In Western countries， civil servants’ overall incomes， including pensions， are only slightly higher than average， causing no big gaps between them and other social classes. However， some civil servants’ pensions in China are even dozens of times higher than those retiring from enterprises， let alone rural residents， who only receive a monthly pension of 55 yuan ($8.8). This kind of dual-track pension system makes ordinary people feel the system is unfair.

　　Yu Fenghui (Zhengzhou Daily)： For years， the discussions and debates on China’s pension system have been unceasing. Now， the two major issues are the huge shortage of pension funds and also inequality concerning distribution.

　　Nowadays， civil servants’ pensions in many countries around the world are higher than ordinary people’s. Studying civil servants’ pension systems elsewhere in the world will help to improve China’s current pension system.

　　The fact that in China civil servants don’t need to pay premiums for their pension is often a topic of complaint. In Germany for example， civil servants don’t need to pay premiums for unemployment benefits and annuities， which is also the case in some other European countries. However， it must be pointed out that it is common practice in many other countries， including developed countries， for civil servants to pay premiums for their pension. This seems an irreversible trend， as some European countries that do not demand their civil servants do so are considering changing the situation. An important reason is that these countries are now facing huge financial pressures in the aftermath of the sovereign debt crisis. As a result， they are considering changing the current social security system that adds additional strain to their funds.

　　Civil servants’ pension in the United States and Germany may be slightly higher than that of enterprise staff. However， the actual amount of money civil servants receive after retirement is affected by many factors， such as the period of time they serve as government workers. Therefore， to compare the figures of their pension is not an accurate way to form a comparison.

　　The key is to compare the pension replacement rates in different countries， which show the level of pensions during retirement relative to earnings when working. The rate for civil servants in the United States is lower than 60 percent， in Germany， it is 72 percent， and in Japan， it is 50 percent. In China， however， the rate is above 90 percent. There， civil servants don’t need to pay premiums for their pension， but they still enjoy the highest pension replacement rate in the world.

　　Zhang Liwei (21st Century Business Herald)： In terms of salaries alone， civil servants in China do not earn so much. In Beijing， for example， where the living cost is much higher than in most places in the country， civil servants’ incomes are low， but they have the privilege of buying houses at a much lower price， and in this way， the disadvantage of their low incomes are somewhat made up for by this privilege. In small cities， civil servants’ incomes tend to be above average. The middle class in China’s medium-sized and small cities are mainly composed of civil servants， as well as staff at monopoly enterprises or government-sponsored organizations.

　　Although some posts offer low pay， more and more young people continue to compete for job opportunities as civil servants. They know that once taking a position with the government， without competition and elimination and with rich pensions， they can enjoy a comfortable life.

　　However， once power is strictly controlled and corruption is severely reduced， we have to face the reality that civil servants’ salary is quite low， or at least that it is not high. This may be part of the reasons why corruption is so hard to stamp out in China.

　　The current unfairness concerning the dual-track pension system comes from the pension replacement rate for civil servants， which is much higher than that for enterprise employees， causing huge gaps between different groups. The reform should first lower the pension replacement rate for civil servants and require them pay their share of pension premiums， and at the same time enterprise retirees’ pension levels need to be raised， so as to narrow the pension gap. Given that in some large and medium-sized cities， civil servants’ salaries are not so high， if their pension is sharply cut overnight， there might be some resistance from civil servants.

　　Civil servants are actually common government workers who are supposed to serve the people， in China and other countries alike. As they already possess certain administrative and fiscal powers， civil servants’ salaries are often set at a fair level in most countries. It is not a job that you can rely on to become a millionaire， and sometimes，when the country falls into fiscal crisis，your income and welfare is the first to be affected. However， in China，due to the deep-rooted idea that government workers are all officials， it’s easy for people to feel angry about civil servants’ high pensions. China is now trying to develop itself into a modern country， so it’s necessary to let its civil servants realize that they are not superior to others and their job is to serve the people. It’s thus reasonable for them to receive pensions at a lower level.