Beijing Pension reserves have fallen below a key government limit in most Chinese provinces as rising deficits from a rapidly expanding population threaten the system’s long-term viability.
China has two major pension schemes in the country. One scheme is mandatory for urban workers and public servants, while the other serves urban residents and rural populations, Nikkei Asia reported.
The reserves of the urban worker system, the largest of the two, fell nearly 10% to 4.83 trillion yuan ($754 billion).
Nikkei Asia reported that the fund’s repayment capacity has also been staggering as reserves in the system have the ability to cover 11.3 months in payments during 2020, compared to 16.4 months five years ago.
The standard of payment is considered to be nine months by the state-affiliated Chinese Academy of Social Sciences.
According to the NIKKEI Asia report, 16 out of 31 provincial-level regions, including highly developed areas such as Shanghai, have fallen below the threshold.
Meanwhile, Beijing is also considering reforms to improve the pension system as the country’s working-age population shrinks.
In addition, the Ministry of Human Resources and Social Security has also predicted that forty million people will retire in the country between 2021 and 2025.
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