China’s basic pension fund for urban employers will see its cumulative surplus peak at 6.99 trillion yuan in 2027, before declining and likely running out in 2035, said the China Old-age Pensions Actuarial Report 2019-2050 released April 10 by the Institute for World Social Security Studies, Chinese Academy of Social Sciences (CASS), reported the
National Business Daily.
In a piece in newspaper the Beijing Youth Daily, commentator Feng Haining first admitted that as China’s old population grows, how to guarantee pension payouts is a big issue. The CASS report is a timely warning, not just to decision-making agencies, but also to the public, Feng said. But we need not be over-nervous about the warning, nor lose confidence in the pension system.
The central pension transfer system enacted last year is paving the way for a national pensions pool and coordination system, which will enhance the overall anti-risk capacities, he noted. The transfer from State-owned capital is pacing up and expanding in scope, a stable source of income for the pension fund. The entrusted investment of some local pension funds has been reaping good returns.
The government said on several occasions it will roll out delayed retirement-related policies at an appropriate time, Feng said. And the stipulation in the Social Security Law that government finance should be diverted to pension funds unable to pay out to pensioners, will survive future revisions, he predicted.
More “weapons” are needed against the risks, he noted. One is to further loosen the restrictions on childbirths to increase the population of future taxpayers. And while lowering the social security contribution rate for businesses, they should be made to comply with the rules to increase pension fund income.
The State should encourage a more diverse mix of old-age pension reserves: financially capable individuals could purchase commercial insurance and save more for their old age; and employers could provide welfare like enterprise annuities.