A NEW Guangdong pension scheme is in trouble as firms hit by a tightening credit squeeze fail to pay contributions.
Vice-chief of Guangdong's Social Insurance Bureau, Long Huisi, said outstanding payments had doubled last year to about four per cent from less than two per cent in 1993.
'There is always a one to two per cent risk allowance. Four per cent is too high,' Mr Long said.
He said the situation was even worse in some parts of the province which registered double-digit increases.
'This has a lot to do with the macro-economic environment. We are in a depression now. And if things go on as now, not only the fund, the economy will also collapse,' Mr Long said.
The shortfall had put more pressure on Guangdong's ability to support the increasing number of retirees from urban and rural enterprises which was expected to reach two million by the turn of the century.
A pension scheme covering mainly state enterprises has been in place in Guangdong since 1983. But since 1993 the province has experimented with a new pension scheme for all urban workers requiring contributions from individual workers, enterprises and the Government.
