SHANGHAI (Reuters) - China’s state pension fund surplus stood at more than 5 trillion yuan ($726.62 billion) in the first half of 2019, a government official said as Beijing tries to allay fears that it will be unable to deal with the costs of a rapidly aging population.
China is facing what experts are calling a “demographic time-bomb” as its elderly population grows and its workforce dwindles, partly as a result of a one-child policy in place for around four decades.
After an official research report showed China’s total pension pot could be “insolvent” as early as 2035, Chinese government officials have sought to reassure the public that their pensions will be guaranteed.
“Everyone should rest assured that we will be able to guarantee that basic pension funds are disbursed on time and in full, not only at present but over the long term,” said You Jun, Vice Minister of Human Resources and Social Security, at a briefing on Friday.
He said that while state measures aimed at reducing the tax burden on enterprises had resulted in falling contributions, China had also set up a strategic social security fund reserve and increased the contributions made by a central government endowment scheme. Provincial authorities were also providing funds to make up shortfalls.
Beijing allocated 528.5 billion yuan in additional subsidies to company pension insurance schemes in the first half of the year, up 9.4% year on year, he said.
The existing state pension fund surplus of 5 trillion yuan was enough to cover more than 18 months of payments, he said, adding that a total of 1.9 trillion yuan was collected in the first six months, with payouts at 1.6 billion yuan over the period.
China is also transferring 10% of government holdings in state-owned firms to pension funds starting from this year, the cabinet said this month.
Reporting by David Stanway; Editing by Nick Macfie