(Yicai) Dec. 18 -- China’s government has reaffirmed plans to increase the state-funded basic pension for urban and rural residents, with the aim of strengthening social security and boosting consumption.

The Office of the Central Financial and Economic Affairs Commission has outlined its approach to stimulating consumption and expanding domestic demand through various means, including enhancing the social security system to drive steady income growth and boost consumer confidence, Xinhua News Agency reported. Measures include raising basic pensions for all residents and increasing government health insurance subsidies.

The office's pledge to raise pensions came in an interpretation of the Central Economic Work Conference, China's top annual economic policy meeting held on Dec. 10 and 11. In March, the country increased the minimum monthly pension for all residents by CNY20 (USD2.84).

The Chinese pension system suffers from low coverage, significant regional disparities, and sustainability concerns, all of which constrain consumption capacity and the willingness to spend, said Luo Zhiheng, chief economist at Yuekai Securities.

Pensions in China consist of the basic pension and private pension accounts, with the national minimum standard for the basic monthly pension rising to CNY143 (USD20.30) last year from an initial CNY55 after seven adjustments. The average pension was around CNY246 a month last year, which is widely recognized as inadequate and a weak link in China's social security system.

China should make a coordinated "state assets-fiscal-social security" reform to increase the transfer of state-owned capital to gradually raise the average monthly pension to around CNY600, about equal to the national rural subsistence allowance, Luo noted.

The monthly pension for rural residents should be doubled to around CNY500 to CNY600 by 2035, when China is expected to achieve basic modernization, according to Zhang Yi, an expert at the Chinese Academy of Social Sciences.

Editor: Martin Kadiev