Ways have to be found to narrow widening social security fund gap

A bank clerk shows a social security card at a branch of China Construction Bank (CCB) in Haian county, Nantong city, East China's Jiangsu province, 30 October 2014.[Photo/IC]

AT A RECENT SESSION OF THE GUANGDONG PEOPLE'S CONGRESS, the provincial legislature, representatives from several cities with relatively poor economic conditions complained about the widening gap in the social security fund. With society aging, the number of elderly residents receiving pension payments has grown at a much faster rate than the number of young people paying taxes. That is a problem not only for Guangdong, says a comment on Beijing News:

It is good that China's social security system is covering increasingly more residents. From 2000 to 2015, the national social security fund increased from 20 billion yuan ($2.9 billion) to 1.5 trillion yuan. All urban residents are covered and the percentage of rural residents covered is growing.

However, the social security system now faces a problem. Society is aging rapidly, while the surplus labor that could be transferred from agriculture to industry and services has reached its limit. In 2016, senior citizens, or those aged above 60, accounted for 210 million of the total population of 1.36 billion in China, while data of the National Bureau of Statistics show that the number of migrant workers grew by 0.3 percent.

In other words, the "input" for the social security fund is decreasing while the "output" is increasing. If that trend continues, those who are working hard today might be unable to get their pensions when they retire. That is a problem that we cannot afford to ignore.

Actually, in some regions, the local social security fund already finds itself unable to pay pensions. Just like Gu Shuhui, a representative from Chaozhou, Guangdong province said, there is a gap in their social security fund and they need to find a way to pay pensions.

Currently many provinces resort to a solution of "overall planning". They unite the local social security funds of all subsidiary regions and use the richer ones to subsidize the poorer ones. But that solution is unsustainable because the richer areas face the same problem too.

It is urgent that the central government consider how to reform the social security system.