A pension deficit could loom

Updated: 2014-02-27 08:41

By He Dan (China Daily)

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Preparations should be made now as population ages rapidly: official

A pension deficit could loom

People play mahjong at a home for the elderly in Zouping county, Shandong province, in November. By 2030, China is forecast to have more than 400 million people older than 60. Dong Naide/For China Daily

China will prepare for a possible pension shortfall in the future amid a rapidly aging population, said a senior social security official on Wednesday.

In 2013, the country saw a surplus of 400 billion yuan ($65.3 billion) in the pension fund for urban employees, said Hu Xiaoyi, vice-minister of human resources and social security, at a news conference.

The total surplus of funds for urban workers, unemployed urban residents and rural residents stood at 3.1 trillion yuan by the end of 2013, according to Hu.

He said earlier last year, one research organization estimated that China' pension shortfalls would reach 13 trillion yuan, which caused public worries, but the latest financial sheets on pension revenues and expenditures proved that such predictions were "groundless".

Future estimation on pension liability should take the economic growth trend and demographic change into consideration, he said when responding to a question about whether China's pension deficit will be 6.8 trillion yuan in 2033 as another research institution predicted.

However, he said because the Chinese population is rapidly aging, authorities will have to make a balance forecast for pension funds in the future and this requires more comprehensive analyses and precise calculations to help with policymaking.

"The purpose of such anticipations is to find out what we should do now rather than waiting until the year 2033 or 2032 to take measures," he stressed, adding that such forecasts should not be manipulated as a tool to frighten the public.

Guo Ping, a researcher at the China Research Center on Aging, said more than 400 million of China's population will be older than 60 as of 2030. If the current pension arrangements remain unchanged, in two decades, one person in the working-age labor pool will need to support each retiree, he said.

"Our current surplus is thanks to that fact that we have more contributors than retirees nationwide, but some provinces have already been troubled by pension deficits," he said.

About 14 provinces and regions saw pension shortfalls of more than 70 billion yuan in 2011, according to Zheng Binwen, director of the Chinese Academy of Social Sciences' World Social Security Research Center.

Although there are uncertainties in economic development and challenges in reforming the current pension system, Guo said he feels confident about the government's ability to offer sufficient pensions for the elderly in the future.

China has established a reserve pension fund to cope with possible expenditure difficulties and the fund pool has accumulated more than 1 trillion yuan as of last year, he said.

It also announced it will gradually suspend the retirement age under a decision made by the Third Plenary Session of the 18th Central Committee of the CPC in November. Many experts have regarded the move as an effective way to relieve the financial burden caused by pension liability.

Hu from the Ministry of Human Resources and Social Security said his agency is doing preliminary work on lifting the retirement age and promised the government plans to solicit public opinions on its future draft plan.

The legal retirement age is 60 for male employees and 55 for female civil servants and those in technical and professional positions.