Photo: CFP

Responding to the growing pressure on China's pension reserves, a former bank official is calling for allocating a proportion of assets confiscated from corrupt officials and a proportion of land transfer fees to replenish pension reserves.

"There is a significant amount of assets confiscated from corrupted official by administrative courts, which could be up to billions of yuan. Is it possible to set up a special account and put all or part of these assets in pension reserves?" asked Dai Xianglong, former governor of the People's Bank of China and former head of the National Social Security Fund, at a pension reserves forum hosted by the Chinese Academy of Social Sciences on Saturday. 

In recent years, with the increasing number of elderly in China, the sustainability of the pension fund is threatened. In 2019, the balance of social insurance funds nationwide was 585.486 billion yuan, and after fiscal subsidies are excluded, was a deficit for the seventh consecutive year.

A research report on China's pension fund released by the Insurance Industry Association of China also predicted that there will be a gap of 8 to 10 trillion yuan in China in the next 5 to 10 years, and the gap will widen over time.

The basic pension insurance led and managed by the government, the enterprise annuity and occupational annuity independently developed by enterprises, and the individual savings endowment insurance and the individual pension insurance form the three pillars of pensions in China.

China's pension system is mainly covered by the social insurance by the government, which is partially supplemented by the enterprises annuity. The individual pension insurance is still underdeveloped, experts said.

Despite growing pressure on the pension reserves payment, Dai said China has the capability to maintain a long-term and sustained balance in pension payments.

"China has strong and sufficient state assets with the net state assets at $65 trillion, plus $75 trillion of the banks. The country also has state-owned land and mines, as well as other resources to build up the pension fund," said Dai.

Meanwhile, with $153 trillion in bank assets, most of which are deposits of ordinary people, and $40 trillion in term deposits in the bank, the individual pension insurance of China will far exceed the social insurance by the government if the country moves forward with tax-deferred commercial pension insurance, Dai said, noting that the three pillars of the pension system must be improved now.

China's economy has grown at a high speed for 30 years, and medium-speed growth is expected to continue, a prospect that officials and experts say is an important contribution to the balanced pension payments in the future.

Global Times