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The Pain of a Pension Deficit (2)

(Beijing Review)

08:53, August 24, 2012

"Now the shortfall in the individual accounts are so enormous, and I'd like to know whether the shortfall can be made up and whether my pension would be affected after my retirement," Li said.

The MOHRSS, however, has denied the shortfall exists. According to the ministry's figures, at the end of 2011 the national pension fund had 1.9 trillion yuan ($299.21 billion) available.

"The endowment insurance fund has more incomes than expenditures, and currently there is no shortfall of the pension fund," said Yin Chengji, spokesman for the MOHRSS.

The "deficit" denied by the MOHRSS means that cash flow of the pension fund system, or withdrawal of pensions faces no problem at the moment. From the incomes and expenditures of the pension fund system, the MOHRSS statement conforms to the actual situation. According to a report released by the National Audit Office on August 2, in 2011 the national pension fund system registered 1.56 trillion yuan ($245.67 billion) in total incomes and 1.14 trillion yuan ($179.53 billion) in total expenditures. The aggregate surplus stood at 1.85 trillion yuan ($291.34 billion) at the end of the year.

The current surplus makes people who withdraw pensions now feel eased, but the shortfall of the national pension fund will not be covered by the current surplus. At present, the number of working people is larger than that of the retired, so the number of people paying the pension fund is larger than that of those withdrawing pensions. Also thanks to the fiscal subsidies, the shortfall is not obvious. Once the employment situation changes, for example, the aging process accelerates or there is serious economic recession, the problem of pension fund shortfall will break out severely.

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