The aging of the mainland is rapidly increasing, and the social security fund reached 600 billion yuan last year.
The Communist Party’s budget execution figures for 2020 show a shortfall of 621.917 billion yuan (RMB) in the national social insurance fund that year.
According to Caixin, the 2021 budget report presented at the Communist Party’s two sessions revealed the 2020 budget execution. 2020 national social insurance fund budget revenue was 7.21 trillion yuan, down 13.3 percent, and with the 50 billion yuan transferred in from the National Social Security Fund, total revenue was 7.26 trillion yuan. The budgeted expenditure of the National Social Insurance Fund is 7.88 trillion yuan, a shortfall of more than 600 billion yuan, exceeding the originally projected shortfall of income and expenditure by 499.673 billion yuan, and for the first Time, the Social Security Fund Strategic Reserve Fund is used.
The Chinese Communist Party attributed the shortfall of more than 600 billion yuan to the rampant plague in 2020 and the phased reduction of corporate social security. However, Caixin acknowledged in its report that the social insurance fund’s reliance on financial subsidy income has been on the rise as the population ages gradually. Since 2017, financial subsidies accounted for 24.3%, 24.9%, 24.4%, 28% and 25.5% of the social insurance fund’s budget revenue, showing a steady increase overall, according to Caixin’s calculations.
Commentator Wen Xiaogang said that the so-called “increasing dependence of the social insurance fund on financial subsidies” means that the social insurance fund has been unable to make ends meet and needs financial subsidies to operate.
In 2013, the CPC prepared the social insurance fund budget separately by insurance type, including the basic pension insurance fund, basic medical insurance fund, unemployment insurance fund, work injury insurance fund, maternity insurance fund and other social insurance funds.
Among the many insurance policies, the biggest overhead is the pension insurance fund, Wen Xiaogang said.
On Nov. 20, 2020, the China Insurance Association released a report on pensions, talking about China’s estimated pension shortfall of 8 trillion to 10 trillion yuan, a figure that will further expand over time.
And in April 2019, the Chinese Communist Party’s Academy of Social Sciences released a pension actuarial report predicting that pensions will be depleted by 2035, even with financial subsidies. If the government wants to fill the black hole in pensions, it will need to invest $11.28 trillion by 2050.
Xie Tian, a chair professor at the Aiken School of Business at the University of South Carolina, has said that in addition to the problem of a rapidly aging population, there is a structural problem with the CCP’s pensions, which have to pay for the pension expenses of the CCP’s huge bureaucracy, which pays the highest pensions and pensions.
In addition, China’s social pension insurance fund has been accused of becoming an ATM for corrupt officials and a small treasury for local governments to embezzle at will. Li Jinhua, the auditor general of the Communist Party’s National Audit Office, has said, “The irregular misappropriation of social security funds by local government officials is widespread, and the loss of funds is serious.”
Faced with the heavy pressure of pensions and an aging society, the CCP has said it wants to postpone the retirement age.
According to current CCP regulations, men retire at age 60, female cadres at age 55, female workers at age 50, and workers engaged in underground, high-altitude, high-temperature, heavy physical labor, and other types of work harmful to health and who have worked in such positions for a specified number of years, men retire at age 55 and women at age 45.
But on Feb. 26 this year, Youjun, vice minister of the Communist Party’s Ministry of Human Resources and Social Security, said at a press conference that the Ministry is studying specific reform proposals to delay retirement, adding that the retirement age in major economies around the world is generally above 65.
Financial commentator Wang Jian said, at this time to come up with a plan, it is likely to be in the two sessions of the Communist Party of China in the form of legislation to pass and implement. The Chinese Communist Party implemented the delayed retirement age mainly to cope with two problems, one is the aging of society; the second is to ease the pressure on the basic pension insurance fund for enterprise employees, and mainly to fill this hole in social security.
According to Wen Xiaogang, once the CCP delays the retirement age, this group of late retirees will not only delay getting their pensions, but also continue to pay pensions because they are still working. The CCP’s move may temporarily ease the huge pressure on pensions, but it is the working employees who will be affected.
The CCP’s move to postpone the retirement age has been opposed by the mainland public, especially front-line employees, with surveys showing that more than 60% of front-line employees oppose late retirement.
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