he Ministry of Human Resources and Social Security released its 2015 report on social insurance, China’s social security system, in mid-October, indicating that around 90 percent of personal pension accounts remain empty.
The personal pension accounts are not controlled by individuals but run by the State. China’s pension system is divided into the “social pool” and personal accounts; the first is, in theory, used to pay pensions to current retirees and the second will be returned to current payers when they retire in the future.
But due to a massive shortfall in the social pool, thanks to an aging population and the failures of the 1980s pension system, under which employees of State-owned enterprises paid nothing personally, local governments have diverted the money in the personal accounts to meet the gaps in the social pool. According to media reports, by the end of 2015, about 4 trillion yuan (US$615.4 billion) had been diverted from personal accounts.