Pensions and social assistance: The development of income security policies for old people in China

Abstract

Current income security policy in China includes two polarized systems: social insurance and social assistance. Social insurance consists of five categories of contributory social insurance programs in areas such as old-age pensions, unemployment, medical care, workers' injury and compensation, and maternity benefits. Social assistance is composed of a series of government funded, means-test benefit programs, providing assistance to individuals and households falling into absolute poverty for the maintenance of a basic living, medical care, education, housing, or other needs. For most of the time since economic reforms started in the early 1980, the major efforts of the Chinese government have been focused on establishing an insurance-based social security system. While social insurance has been extended substantially in recent years, covering people in both formal and informal sectors and the rural population, levels of benefits vary markedly between people under different schemes. Social assistance began to play an increasingly important role during the mid-1990s in response to emerging poverty in the cities and persistent poverty among the rural population. However, due to the absence of more broad-based policy interventions particularly in health and education, the effects of social assistance in reducing elderly poverty tends to be limited. This chapter described the development of income security policies for old people in China, including pensions and social assistance.