SCIO briefing on China's employment and social security
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E-mail China.org.cn, February 29, 2016
China National Radio:
My question is about pension funds. Recent reports claimed there is a gap in China's pension fund, resulting in a difficulty in issuing pension in some areas. I would like to ask how big the gap is and how we should deal with the situation.
Yin Weimin:
The gap in pension funding has attracted wide public attention and stirred up many discussions. First, on the national level, the operation of pension funds has been stable, and there is no such a gap. Last year, the total income for pension funds stood at 2.7 trillion yuan (US$413.24 billion) and its expenditure was 2.3 trillion yuan (US$352.02 billion), so the annual balance was more than 300 billion yuan (US$45.92 billion) and the overall balance was 3.4 trillion yuan (US$520.37 billion). The figure shows that no gap exists across the country, given that our ability to pay will last for 17 months.
Second, as for different provinces, an imbalance does exist and the disparity varies from province to province. Since the pension fund is conducted individually by different provinces, many factors, primarily the demographic structure, have resulted in these differences. Some provinces are capable of issuing 40-50 months' pensions, whereas others could sustain only 1-2 months. Last year's statistics show that seven provinces' pensions were experiencing a deficit for the past year alone, though they still had a surplus as to the total fund. It is like a household. This month you made 1,000 yuan but spent 1,100, so the monthly deficit was 100. However, you don't have to borrow money since you still have a deposit of 10,000 yuan, which is enough to pay off all the expenditures. Even when the seven provinces had to draw money from their total funds, there was still no deficit created.
Third, from the long-term perspective, this issue is indeed worth mentioning, and we should make preparations for future difficulties, especially the aging population. This calls for stronger sustainability of the pension fund. As for specific measures, I have already talked about them just now. The abovementioned seven to eight measures are all centered on the pension fund's sustainability.
With regard to the reform of the pension system, the basic principles are fairness and sustainability. I think the public can relax on this issue, since we will implement a series of reform measures to ensure the sustainability of pension plans. There is no problem there. Thank you.
Beijing TV:
Some people have pointed out that the "the more you contribute, the more you reap" stimulus mechanism in the pension system is not noticeable enough, and that the pension funds for newer retirees are reduced year after year, attributing these to certain people's suspension of pension contributions. How would you comment on this, and would more payments ensure more benefits? Thank you.
Yin Weimin:
In designing China's pension system, we followed a basic principle of more benefits for more and longer contributions. The system combines social contributions with personal contributions. Years of practice show that the system is sound overall. For social contributions, we pay more attention to fairness to allow secondary distribution to play a part. For personal accounts, we stress each person's own contributions to their pension plans. The more they contribute, the more they will reap in the future. The system has been developing throughout the years. As I mentioned above, we have a plan to improve personal accounts, in which we will stress the role of stimulation and restriction. We will roll out concrete measures for this undertaking. Thank you.
Hu Kaihong:
This marks the end of today's press conference. Thank you, Minister Yin, Vice Minister You, and our friends from the press.
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