BEIJING (Reuters) - Many Chinese pension funds are under renewed pressure to break even as local governments race to increase pension payments to meet central government requirements, state news agency Xinhua said in a commentary on Tuesday.
The central government has ordered pension payments for corporate retirees to be increased by around 6.5 percent in all provinces, Xinhua said.
China’s northeastern region of Liaoning has implemented a 6.75 percent rise in pension payments, which is estimated to cost the fund around 11 billion yuan ($1.65 billion).
Liaoning’s pension fund deficit was 10.5 billion yuan in 2015, Xinhua said, citing an annual report published by China’s Ministry of Human Resources and Social Security.
Pension funds in six provinces, including all three rustbelt provinces Liaoning, Heilongjiang and Jilin, already struggled with deficits in 2015, according to the report.
Despite the pressure to balance rising costs, the article said “systematic fiscal stipends would ensure costs to be balanced and that all retired corporate employees would receive full pension payments on time”.
China’s State Council, or cabinet, said late last year that dividends and income from state enterprises would be used to fill in gaps at pension funds and other social security funds, as part of plans to reform its inefficient and heavily indebted state-owned sector.
Xinhua said the coastal province of Shandong has spearheaded this effort, with Shandong transferring a sum of 18 billion yuan ($2.7 billion) so far and Shanghai planning to put no less than 19 percent of state enterprise income to subsidize the fund.
Reporting by Yawen Chen and Nicholas Heath; Editing by Jacqueline Wong