The government has encouraged more companies to follow the Lenovo Group in introducing additional pension schemes.

 

On Wednesday computer giant Lenovo announced an additional pension program, to ensure its China-based employees quality of life throughout their retirements.

 

Lenovo is the first Chinese company to register its corporate pension program, approved by the Ministry of Labor and Social Security.

 

Together with the social pension insurance required by the government, the voluntary corporate pension scheme, known as enterprise annuity, will increase benefits to working people after retirement.

 

"We are very proud to be among the first to offer retirement benefits to our employees in China," said Ezra Singer, Lenovo Vice President of Compensation and Benefits.

 

Chen Liang, the ministry's Fund Supervision Department director, said the additional welfare offered by the companies should become an essential part of China's pension system, offering a better life for the nation's increasing number of retirees.

 

"We will design more incentives to encourage companies to follow suit," said Chen. "The money the companies spend on pensions should be tax-free."

 

However Chen said tax policies in various regions in China are different, presenting a barrier to spreading the availability of corporate pensions.

 

Lenovo said about 70 percent of its Chinese employees have applied to join the pension program and the company and employees will equally share the payments into the pension account.

 

According to its program plan, Lenovo employees' pensions will be tripled after they retire.

 

Before the program, for example, an average retiree could receive a 1,300 yuan (US$160) monthly pension, while an average employee could earn 6,000 yuan (US$750) per month.

 

After the pension program is implemented the same retiree could receive up to 3,600 yuan (US$450) per month, or 60 percent of their previous salary.

 

Lenovo has selected corporate pension service providers Ping An Endowment Insurance Company, China Merchants Bank and Harvest Fund Management Company Ltd to serve as trustee, custodian and investment manager, respectively, of the new scheme.

 

Liu Junsheng, a researcher with the Labor-Wage Institute under the Ministry of Labor and Social Security told China Daily the new pension schemes could greatly improve retirees' quality of life, if they are implemented nationwide.

 

Liu is concerned that retirees in China currently receive relatively low pensions compared with those still in work.

 

Statistics indicate the average pension is currently only 20 percent of the average employee's wage. In developed countries it is between 40 and 60 percent of the average wage.

 

"If the rate continues to be this low, retired people will not be able to improve their lives," said Liu. "New measures are urgently needed as China is an aging country."

 

He said China's population is growing older at an ever-faster pace and more than half-a-billion rural and urban workers don't participate in state-run social security schemes.

 

And China's implicit pension debt could climb to as much as 9.15 trillion yuan (US$1.14 trillion) during 2001-75, according to the World Bank.

 

"All the facts indicate the urgency for us and companies to save and invest for retirement," said Liu.

 

(China Daily July 7, 2006)