China edges closer to national pension system with ‘balancing’ of main retirement fund as population ages
- National balancing was started on January 1 for the corporate employees pension fund to ‘allow shortfalls to be compensated by surpluses nationwide’
- The government has been working to link the various provincial pension plans into a national one, so that money from richer areas can be used to support poorer areas
China has taken another step toward setting up a national pension system, beginning the “balancing” of its main retirement fund to help regions with older populations continue to make payouts.
National balancing was started on January 1 for the corporate employees pension fund to “allow shortfalls to be compensated by surpluses nationwide,” deputy finance minister Yu Weiping said on Tuesday.
An adjustment fund for the corporate employees’ pension fund was set up in 2018 to allow the central government to redistribute some money to address those shortfalls, and this new policy aims to take that further.
The central adjustment fund moderately balanced the pension fund burden between provinces. It was the first step toward national balancing
“The central adjustment fund moderately balanced the pension fund burden between provinces. It was the first step toward national balancing,” Qi Tao, an official with the Ministry of Human Resources and Social Security, added on Tuesday.
More than 600 billion yuan (US$94.7 billion) has already been redistributed between provinces by the adjustment fund through the end of 2021, according to Qi.
The national balancing system “will resolve structural problem with the pension fund and provide more guarantees for payouts in regions with difficulties”.
People aged 65 and above were almost 20 per cent of the working-age population at the end of last year, nearly double the proportion two decades ago.
The rust-belt provinces in the country’s northeast and the remote, poor regions in the northwest such as Gansu and Qinghai were among the places with the biggest pension payout pressures, according to a report published in 2018 by the Chinese Academy of Social Sciences, a top government think tank.
