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The Pain of a Pension Deficit

(Beijing Review)

08:51, August 24, 2012

Two seniors from Henan Province stand in front of a wall full of characters of "good fortune." In Henan, there are 11.95 million seniors aged above 60, accounting for 12.72 percent of the provincial population (Beijing Review/Wang Song)

"One day, when I'm old, I may not be able to provide for myself...." That's a song Li Jianjun loves best, and every so often he would worry about his pension life whenever he hears the song.

Officials from the Ministry of Human Resources and Social Security (MOHRSS) have repeatedly emphasized that China's pension fund won't run dry, but still Li feels insecure about his future and retirement. Li favors the words of experts.

Zheng Bingwen, Director of the World Social Security Research Center at the Chinese Academy of Social Sciences (CASS), told the media that in 2011, Chinese employees paid 2.5 trillion yuan ($393.7 billion) into their pension accounts, but less than 300 billion yuan ($47.24 billion) was ready for payment.

This is why Li and millions of others worry.

Li, 35, has worked for 11 years at a current monthly pay of 4,000 yuan ($629.92). Each month he pays 8 percent of his average monthly wage from the previous year to his individual pension account. Li's employer also pays 20 percent of his average monthly wage to a social collection fund.

The social collection fund and individual account are the two components of China's pension fund system.

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