Revenue collected by the government-run basic pension scheme exceeded expenditure in the first five months of this year. The surplus will likely continue for the rest of this year, ensuring benefits are paid in full and on time, according to a spokesperson for the Ministry of Human Resources and Social Security.
In the first five months of the year, CNY1.58 trillion (US$231.5 billion) flowed into pension funds for workers, up by 23.9% year on year, reported the Xinhua News Agency citing data from the ministry.
Total expenditure in the period increased by 23.2% to CNY1.35 trillion, leaving a balance of around CNY226 billion. The accumulative balance stood at CNY4.08 trillion at the end of May.
While the overall picture stays positive, geographical imbalance remains. In areas where economic growth is behind the national average, such as in the old industrial base of northeast China, fewer people paid contributions while many have retired, resulting in a deficit.
"We should start from where we are now and focus on the long term, taking effective measures to ensure steady growth of the pension fund and promote the sustainable growth of the pension system," the spokesperson said.
China has been actively expanding pension fund coverage. By the end of 2016, employees participating in workers' pension funds totalled 379 million, 25.7 million more than a year ago.
Fiscal funds have been an important source of income for pensions. Since 1998, central fiscal funds have contributed CNY2.57 trillion to pension funds for enterprise employees.
The country will continue to increase pension fund revenue by expanding coverage and increasing investments, the ministry said. The central government will also play a bigger role in addressing the geographical imbalance, making proper adjustments to ease the burden in areas with pension fund deficits.
The authorities are also striving to achieve better returns. Pension funds are traditionally deposited with banks or used to purchase treasury bills. They are now allowed to be invested in a variety of financial products, including bonds and stocks.
To contain the risks associated with higher yields, the government has set a 30% limit on the proportion of pension funds investable in stocks, while various systems to guarantee fund security, including internal controls and risk provisions, are gradually established.
In the meantime, China is promoting private retirement products to supplement the basic social pension scheme.
At a meeting chaired by Premier Li Keqiang last Wednesday, the State Council decided to speed up the development of commercial pension insurance, urging insurance companies to offer personalised and differentiated services to individuals and households.