China's pension funds’ expenditure is still increasing rapidly. The Statistical Communique on the Development of Human Resources and Social Security in 2017 issued by the Ministry of Human Resources and Social Security on May 21 showed that the total expenditure of basic pension funds for employees in 2017 was 3,805.2 billion yuan, an increase of 19.5 percent year-on-year, an increase of 1,877 billion yuan in 2013. This means that the pension funds’ expenditure has more than doubled in the past four years. In addition, the gap between fund collection and fund expenditure continued to expand. The system’s dependence on financial subsidies continued to increase.
The gap between fund collection and fund expenditure is still expanding. According to the communique, in 2017, the total income of the basic pensions fund for urban employees was 4,331 billion yuan, of which the fund collected was 3,340.3 trillion yuan, and the total fund expenditure was 3,805.2 billion yuan. The fund size is only 87.78 percent of the current fund expenditure. Data shows that since 2014, the expenditure of the basic pension fund exceeded the amount of collection, and the gap was 132.1 billion yuan. Since then, the gap has continued to expand.
“In 2017, the fund expenditure increased by 106 percent compared to 2013. Since the rate lowed, the collection income slowed down significantly. In 2017, the fund revenue increased by 91 percent compared to 2013. The fund expenditure growth was significantly faster than the revenue. The accumulated balance in 2013 can be paid for more than 18 months, and by 2017 it has been less than 14 months,” Zhang Yinghua, executive researcher of the World Social Security Research Center of the Chinese Academy of Social Sciences, told the Economic Information Daily reporter.
“The gap has been expanded due to various factors. First, retirees are growing naturally. Secondly, the pension fund has increasing for 14 consecutive years since 2005, pushing the funds’ expenditure to some extent. Thirdly, the system support rate continued to improve. Fourthly, funds across the nations is not sufficiently coordinated,” said Guan Bo, an associate researcher at the Institute of Macroeconomic Research at the National Development and Reform Commission.
In addition, the system's dependence on financial aid funds is also increasing. The communique pointed out that in 2017, the total income of the basic pension fund for urban employees was 4,331 billion yuan, of which the basic pension funds’ subsidies at all levels will be 800.4 billion yuan. Fiscal subsidy funds increased by 165.12 percent compared with 2013. Subsidies accounted for 18.48 percent of total fund revenue, an increase of 5.17 percentage points over 2013. Zhang Yinghua pointed out that the scale of the basic pension financial subsidy has exceeded 800 billion yuan in 2017, which is equivalent to 4 percent of the total financial expenditure, which is a significant increase compared with the 2.2 percent in 2013.
Translated by Coral Zhong