Steps taken to stave off pressures from China's aging population

China's social security authority is planning to expand investment channels for its social security fund to handle the pressures that come with the country's aging population, Human Resources and Social Security Minister Yin Weimin said on Tuesday.

"The aging population is a global problem in this century, especially in China. It tests a country's capacity to maintain a financial balance in the long term," Yin said in a speech at a seminar in Beijing.

"Concerns over the social security funding gap also come out of worries about the aging problem."

There were 194 million adults aged 60 and above in China last year, accounting for 14.3 percent of the country's entire population. That figure is set to increase considerably by 2030, putting pressure on the country's social security fund, which had a total surplus of 3.75 trillion yuan ($608.7 billion) last year.

"There is a Chinese saying that goes 'A man without forethought has immediate worries'," Yin said, stating that the ministry should accomplish several tasks to cope with the risks of the aging population, including increasing the value of the social security fund.

To this end, the ministry only allows deposits in State-owned banks, as well as the purchase of treasury bonds, Yin explained.

"This assures the security of the fund. But it also narrows value-added channels and limits the potential to add value," he said.

"We need to expand the investment channels of the social security fund, while we stick to the principles of security, standard and unified operation and diversified financing."

Yin revealed that the ministry is forming an operation plan for the investment of social security funds and will submit it to the higher authorities.

Liu Shangxi, deputy director of the Research Institute for Fiscal Science under the Ministry of Finance, said,"Investments are an important way to maintain and increase the value of the fund, but the government should take a few measures to ensure its security.

"After all, the social security fund is the lifeline of ordinary people."

Liu pointed out that the investment procedure as well as the operating mechanism has to be established by law, "otherwise it will leave a loophole for embezzlement".

He said the responsible organization should set up investment plans and report them to the National People's Congress.

"In addition, the entire process should be transparent, with each investment, profit or loss published to the public."

However, Liu is not so pessimistic about the social security funding gap.

"Social security is not social welfare. It only covers retired people who paid for it when they were working - in other words, it only covers part of the total retired population," he said.

"On the other hand, labor productivity is increasing, so it would not be so difficult for the labor forces to support the retirees by 2030."

Wei Tian contributed to this story.

chengyingqi@chinadaily.com.cn

(China Daily USA 07/17/2013 page6)