China's Finance Ministry said this week the rapid growth of pension payments is eating up pension reserves. 22 provinces are likely to post a deficit in their pension fund balances by year-end.
Data shows pension income in 2014 gained 11.9 percent from a year ago. But total payment jumped almost a fifth, and the gap has been expanding. It was still a surplus for the national pension fund at the end of last year. But there are concerns of a serious deficit, and there was talk the Finance Ministry planned to plug the hole with 50 billion US dollars of state-assets. If the current situation continues, analysts say, the pension pool would dry out. There are several things to blame, such as a lack of investment channels, and inefficient pension fund management. The link between the pension system and residency registrations also makes the migrant population unwilling to pay for the national pension program. On the upside, the country is attracting foreign investment to China to beef up the grey economy. It's also easing rules on individual investments to boost personal wealth.