As time goes on, each of us will usher in a major stage in our lives – retirement.
After all, after years of busy work, it's time to enjoy a comfortable old age.
However, if you want to ensure the comfort and tranquility of old age, you will inevitably need to have a solid pension as support.
But you probably don't know it yetStarting next year, those who are preparing to retire may need to do more to prepare, because a major reform is coming.
So, what exactly is this change?And what concrete impact will it have on our retirement life?
01 What are the specific changes?
Starting in September 2024, China will end the current "dual-track pension system", which means that the pension system for enterprise retirees and government retirees will be unified.
Previously, there were obvious differences between the two in terms of pension amounts and treatment.
With the integration of the pension system, the pension insurance payment and receipt standards of institutions and enterprises will also be unified.
This will eliminate the difference in treatment caused by job titles or additional bonuses that existed in the past.
In particular, for people born between 1964 and 1974, the end of this merger system may lead to a major change in the way their pensions are calculated.
The new calculation method will mainly determine the amount of pension based on the number of years of payment and the payment base.
This could mean the abolition of transitional pension benefits!
In the context of this major reform, we need to make the following two preparations:
02Prepare for a fairer payment of pensions
In the past, there was a clear difference between the pensions of enterprise retirees and those of government agencies and institutions.
With the implementation of this change, this gap is expected to be relatively narrow, resulting in a more equitable distribution of pensions.
In short, the previous dual-track pension payment method ignored the principle of distribution according to work to a certain extent.
As the direct producers of the country's material wealth, the employees of enterprises have made great contributions to the country.
However, their pensions are much lower than those of government and public employees, which is inconsistent with the principles of social fairness and justice.
In addition, according to the Constitution, both employees of private enterprises and civil servants should enjoy the same pension security after retirement.
The implementation of this principle is essential to maintaining social equity.
At a deeper level, such a glaring pension gap exacerbates the gap between rich and poor in society and may pose a threat to social stability and harmony.
Therefore, regardless of our personal opinions, we should be soberly aware of the need for this change and prepare for a fairer pension system.
03 Improvement of pension benefits
Of course, fairness does not mean that the pensions of government institutions will be reduced, or that the pensions of enterprise retirees will increase significantly.
This understanding is inaccurate.
The real fairness is reflected in the principle of "pay more, pay more, pay more for a long time", which means that the distribution of pensions will be based on the amount of contributions and the number of years of contributions.
If the employees of government institutions pay more and pay for a longer time, they will naturally get more pensions.
At the same time, the merger of pension pools, on the whole, may lead to a relative increase in pension benefits.
Two previously separate pools of funds that require different strategies and teams for management and operations can lead to inefficiencies.
After the merger, it is expected to improve overall efficiency through unified management and operation.
Finally, an increase in the size of the pool could have a positive impact on retirees who had lower incomes in the past, and their pensions could increase slightly as a result of the consolidation.
All in all, starting next year, those who are preparing to retire may need to make two preparations, which are generally positive, and everyone will wait and see!