Six provinces across China reported shortages in pension funds as they could not make ends meet, a recent report on China's social security development revealed.
The Annual Report on China's Social Security Development 2015, which was recently unveiled by the Ministry of Human Resources and Social Security (MOHRSS), showed that urban and rural pension funds had a combined surplus of four trillion yuan (US$601 billion) at the end of last year. It also showed that the yield for corporate pension funds reached 3.1 percent, the highest in the past seven years.
But the fund's size and its high yield still cannot eliminate the public's concern over the mounting pressure surrounding senior care, as the 2015 data showed that pension funds across the nation are only payable for 17.7 months, down from 19.7 months in 2012.
Six provinces reported a deficit in the urban corporate pension funds that are to be issued in the upcoming month, namely in Heilongjiang, Liaoning, Jilin, Hebei, Shaanxi and Qinghai; in 2014, only three provinces had similar difficulties.
Take the three provinces in northeast China for example. Heilongjiang had a deficit of 18.3 billion yuan (US$2.76 billion) in its corporate pension fund, whereas the deficit was 10.5 billion yuan (US$1.58 billion), and 4.1 billion (US$616.5 million) for Liaoning and Jilin respectively.
Yang Yansui, chief of the Research Center of Employment and Social Security at Tsinghua University explained that much of the four trillion yuan's surplus still stays in personal accounts, meaning that the government cannot freely allocate it, and the current "pay as you go" pension system is being challenged by the dropping dependency ratio.
It means that fewer working people who contribute to the fund have to support an elder's monthly plan.
The aforementioned report revealed that in 2015, the dependency ratio for corporate pension funds dropped to 2.87:1 from 2.97:1 registered one year earlier, meaning that less than three workers have to raise an elder.
Yang said that when the actual dependency ratio drops to 3:1, the rate for pension contribution has to stay above 17 percent; when the dependency ratio drops to 2:1, each person has to contribute for 25 percent.
The current pension system is restricted from two perspectives. On one hand, the government lowers its contribution rate and thus reduces overall income, and on the other hand, some local governments have to allocate money from elsewhere in local revenue to ensure each month's pension payment.
Among the various reform measures, gradually delaying retirement is a highly debated one and MOHRSS has provided a timetable.
