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Celine Ge

China’s pension funds recorded a net increase in asset value last year despite growth in spending outstripping that of earnings, a government report showed on Monday.
The funds’ asset value came up to as much as 3.99 trillion yuan (HK$4.7 trillion) at the end of 2015, according to the report from the Ministry of Human Resources and Social Security.
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The funds drew an annual revenue of 3.22 trillion yuan, far more than its expenditure of 2.79 trillion yuan, the report said.
The asset value increase came as a relief amid growing public concern over China’s difficulties in fulfilling its pension payment obligations because of its rapidly ageing population and low investment returns.
But the report also indicated that the pension funds’ year-on-year growth in total spending in 2015 – at 19.7 per cent – was more than its year-on-year growth in total income, at 16.6 per cent.
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The increase in expenditure was largely due to a policy change that increased the payout for China’s over 79 million retirees from local firms by 10 per cent to an average of more than 2,200 yuan a month. It used to be ABOUT 2,000 yuan.
The four other types of social security funds – covering medical, unemployment, maternity and employment injury insurance – also recorded increases in asset value, according to the report.

Medical insurance funds did very well last year because of China’s health-care system reforms and an improved management mechanism, Huang Huabo, deputy director of the ministry’s security fund management centre, was quoted as saying.
But he warned that the ageing population’s rising demand for health-care services would increase the funds' expenditure in the years ahead.
For a healthy and sustainable pension system, China must fill the funding gap
In April, finance vice-minister Wang Baoan cautioned that China’s pension funds was likely to face a funding shortfall because of growing obligations.
Beijing planned to allow the funds to be put into more investment trusts and corporate bonds to chase higher returns, he said.
The combined value of China’s pension funds that could be invested was 2 trillion yuan at the end of last year, according to official data.
State media has reported expectations that the massive pool of funds – accounting for some 90 per cent of all social security funds – will be channelled into the country’s volatile stock markets this year.
Last August, the cabinet issued guidelines allowing local pension funds – historically restricted to safer but low-yielding options such as treasuries and bank deposits – to buy riskier assets such as bond and equity funds.
The everyday challenges of China's ageing population demand attention
In China, employees usually contribute 8 per cent of their monthly salary to their pension accounts, with their employers making a mandatory contribution of another 20 per cent.
Institutional investors manage the funds, to which some 837 million people contribute. The funds support about 226 million retirees.


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Ageing society

Pension fund’s rise in value sparks relief amid worries China cannot pay its retirees

Elderly people dance during a morning exercise session at the Temple of Heaven park in Beijing. China’s greying population and low investment returns have spawned concern over whether it can keep up its pension payments in the long term. Photo: Reuters

FILE - In this Tuesday April 10, 2012 file photo, elderly people take a nap at a day care center in Shanghai, China. Nursing homes are not an option for most Chinese. The few nursing homes in China supply only 22 beds for every 1,000 seniors, and most are too expensive for the average family. Even children who can afford nursing homes fear sending their parents away will mark them as unfilial. (AP Photo)

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Net increase in asset value last year despite growth in pension spending outstripping that of earnings


Pension fund’s rise in value sparks relief amid worries China cannot pay its retirees

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Net increase in asset value last year despite growth in pension spending outstripping that of earnings

Net increase in asset value last year despite growth in pension spending outstripping that of earnings