Insecure Social Security

Alongside the graying population, it is increasingly difficult for China’s social security funds to make ends meet. Official statistics show that more than 400 billion yuan (US$58b) in government financial subsidies was injected into the national pension insurance fund annually in recent years, accounting for more than 15 percent of the pension insurance fund income. In 2016 alone, however, seven provinces witnessed a pension insurance fund income shortfall. In Northeast Heilongjiang Province, there was no surplus at all. It tests policymakers’ wisdom to maintain the sustainable growth of pension insurance funds without putting a heavy burden on companies, particularly small- and medium-sized firms. Experts warn that it is time to establish a precise and balanced pension insurance system based on the growth rate of average salaries, rate of return on investment and life expectancy, and adjust the premium rate, payment rate and minimum period of payment to maintain a sustainable balance between generations.