Pension insurance in many provinces can not cover the expenditure of the reform 18 years why the money is not enough to spend

Pension insurance in many provinces is not enough to cover the costs of the reform of 18 years why the money is not enough to spend

Core tip: the Ministry of Human Resources and Social Security will take measures to enhance the fund's ability to support. It will continue to increase the expansion of social insurance collection; raise the level of coordination, the implementation of the national coordination of basic pensions; further broaden the fund financing channels, and start the implementation of the investment and operation of the pension insurance fund. In addition, it will also take to increase financial subsidies, allocation of state-owned assets to enrich the social security fund to enhance the financing capacity.

The Ministry of Human Resources and Social Security will take multiple measures to enhance the fund's support capacity. It will continue to increase the expansion of social insurance collection; raise the level of coordination, the implementation of the national coordination of basic pensions; further broaden the fund financing channels, and start the implementation of the investment and operation of the pension insurance fund. In addition, the fund-raising capacity will be strengthened by increasing financial subsidies and allocating State-owned assets to enrich the social security fund. It will implement a policy of gradually delaying the retirement age; develop a multi-level pension insurance system and promote the development of corporate and occupational pensions.

A new round of pension insurance reform has begun.

According to the timetable set by this year's national "two sessions", the national co-ordination program for employee pension insurance will be introduced within the year; the delayed retirement program will be formulated this year and reported next year, and formally launched in 2017; together with the pension investment and operation program released, the authorities and institutions will be combined, and urban and rural residents will be merged into a pension insurance program, these five reforms constitute a new round of pension insurance reform. programs, these five reforms constitute the framework for the future reform of China's pension insurance system.

Hu Jiye, a professor at the Center for Law and Economic Studies at China University of Political Science and Law, sees the package of reforms as a new phase in China's pension insurance reform since the 1990s.

However, since 1997, when China formally established the united account pension insurance system to date, last year, there was a current contribution income does not cover the expenditure, and according to last year's expenditure of 1.9 trillion yuan to measure, if not injected into the pool of new funds to the current 3.5 trillion yuan of the pension stock, more than a decade later will run out of money.

Multi-track impact

In 2004, due to the restructuring of the local state-owned enterprises, Li Li (a pseudonym) has worked for 16 years from the reeling factory laid off into a private enterprise re-employment. She only remembers that year when she retired out of a social security policy, but to their own retirement exactly how much money can be exchanged, she also puzzled.

Li Li is just one of the individuals in the wave of institutional transformation, but she is by no means alone in not being clear about how this account should be calculated. In the 1990s, as a result of economic reforms that led to the closure of a large number of state-owned enterprises, the so-called "units" no longer existed, and the original system of relying on the units to protect the system was unsustainable, the pension insurance system from the units to social security, and thus the establishment of the country's combination of social coordination and individual accounts (referred to as the combination of the accounts) system.

Cheng Bingwen, director of the World Social Security Center of the Chinese Academy of Social Sciences, summarized the reasons for the establishment of the current system in the article "China's inflation combined with the current situation of pension insurance, problems and the way out" as "the reform of state-owned enterprises gave birth to the birth of China's social security system".

At that time, the three-pillar model of pension insurance was established through the introduction of individual contributions; and through two subsequent documents in 1995 and 1997, the system of combined contributions of 20% by the unit and 8% by the individual was formalized.

According to the intended goals of the system's design, the social integration portion is to reflect fairness and implement a pay-as-you-go system, while the individual account portion is to reflect incentives and implement an accumulation system.

"A pension insurance system that has been running for 20 years has failed to meet its goals." Zheng Bingwen commented in an interview with the 21st Century Business Herald that because the shadow of the personal account is invisible, the actual personal account has become part of the social integration.

In a way, the employee pension insurance system established by the reform of state-owned enterprises is less adaptable to the non-state sector, such as the private sector, which joined the system later, as well as to migrant workers who are in a state of mobility.

How big is the invisible gap?

Li Li was also confused when she was about to retire: companies and herself had already paid for pension insurance, and everyone was saying that the treasury would also subsidize pension insurance every year, so why would there still be a funding gap from time to time?

From the Ministry of Human Resources and Social Security bulletin and other information shows that since 1997, since the establishment of the united accounts system, the state finance began to subsidize the pension insurance, from 200 million that year, to 16.8 billion in 1999, and then in 2007, 115.7 billion, as of 2014, the 18 years, all levels of finance **** pension insurance subsidies of nearly 2.2 trillion.

On the other end of the spectrum, in terms of the account's balance of revenues and expenditures, as of the end of 2014, the stock of the basic pension insurance fund for urban workers stood at 3,180 billion yuan, and the stock of the basic pension insurance fund for urban and rural residents stood at 3,845 billion yuan, with the two ****ed up to about 3.5 trillion yuan.

The total plate seems to have a lot of balance, but from the current income and expenditure point of view, the actual 2014 inflection point has appeared, the current pension first income and expenditure deficit (see the 21st Century Business Herald on November 19, page 5, "Pension Annual Income and Expenditure is now in the red, do not reform more than ten years after the depletion of the balance"). This indicates that the current income and expenditure channels have dried up, is to rely on part of the stock of funds to run.

However, more worrying to scholars is the problem of invisible debt outside the explicit accounts of pensions. The so-called invisible debt means that the real pressure to pay is simply being deferred, especially as the expansion of the collection of people into retirement, the payment gap will be more visible.

The report "Prediction and Measurement of Invisible Debt under the Existing Unified Account Combination Model," released by the Chinese Academy of Social Sciences in 2014, showed that taking 2012 as the baseline, the invisible debt of the social co-ordination account was 83.6 trillion yuan, and that of the individual account was 2.6 trillion yuan, which totaled to 86.2 trillion yuan under the united-account combination system of basic pension insurance for urban workers, accounting for a 2012 The ratio of GDP in 2012 was 166 percent.

"In any case, a fact is that the existing invisible debt is still very large." Nie Riming, a researcher at the Shanghai Institute of Finance and Law, said in an interview with the 21st Century Business Herald that such a large-scale shortfall can only lead to "massive defaults," either by delaying retirement and reducing the number of years of receiving pensions, or by inflation and shrinking pensions in hand.

In his view, the reason for the invisible debt problem, on the one hand, is the treatment of deterministic expenditures brought about by the new cost, a simple understanding is that regardless of how much the current income balance, but the pension payment is still to the current average social wage as the basis for the issuance of the benchmark. This also brings about an increase in the amount of pension payment units; in addition, due to the aging of the population brought about by the increase in the number of pensioners, the corresponding level of receipt and the number of recipients of double growth, undoubtedly increased the overall payment pressure.

And in Nie Riming's view, another deeper problem is the historical legacy of the cost of 1997 when the system was converted, which has dragged on until now.

Enterprise employees were covered by a pay-as-you-go model of pension insurance before the system was switched, with neither the unit nor the individual ever contributing to pension insurance, and this was not compensated for when the shift was made from an enterprise-paid pension to a combined-accounts model.

The state once tried to solve the problem of empty individual accounts in basic pension insurance, and has piloted the realizing of individual accounts in 13 provinces and municipalities, but the effect is very little.

Multiple measures to raise funds

Originally, it was hoped that the historical cost of the transition would shrink over time, but with the growth rate of new entrants to the pension insurance system slowing, the invisible gap is now seen to be ballooning.

This is even more evident in provincial balances. The Ministry of Finance in 2009, the national social insurance fund final accounts report shows that year, after deducting the financial subsidies, the basic pension fund for enterprise employees in the year deficit of 13 provinces; turn to 2014, the deficit provinces increased to 22. This means that nearly 70% of the country's provinces have appeared deficit warning.

In Nie Riming's view, the reason why the problem of tight funding is now getting more and more serious is very important because we missed the timing of the reform.

According to Hu Jiye's analysis, pension insurance has been in the process of expanding the collection surface from 1997 until now, and now basically covers the working population.

The expansion means an increased source of current pension insurance revenue. Especially for the urban workers' pension insurance system, which has not yet absorbed the costs of the conversion, the number of insured people basically increased at an annual growth rate of 5 percent from 2002 to 2011; at the same time, the corresponding current balance has been growing steadily at a rate of 10 percent each year, with the balance growing at a rate of more than 30 percent in six of the past 10 years.

"In the social security gold (1055.90, -14.10, -1.32%) period, there is a steady stream of contributors to come in, which provides a stable income for the pension insurance; and at that time in the 'WTO' China's rapid economic development stage, the efficiency of state-owned enterprises is also very good! , which happened to be a good time for reform." Nie Riming said.

In contrast, he argued, migrant workers, who drove the rapid growth in employee participation over the past 10 years, have now begun to move into cities at a slower pace.

Recently, Li Zhong, spokesman for the Ministry of Human Resources and Social Security, responding to the gradual delay in the retirement age and the issue of pension payments in some provinces, said that since 2014, affected by multiple factors, the current pension expenditure is greater than the fund collection income of the provinces increased. The main reason is that the level of pension benefits has been continuously adjusted upwards, and the fund expenditure has increased; the effect of population aging has gradually appeared, and the growth rate of the number of retirees among the insured is higher than that of the number of people who have paid contributions; the dependency ratio is higher in some areas, and the burden is heavier.

In the view of He Wenjiong, a professor at Zhejiang University and vice president of the Chinese Society of Social Security, the basic pension standard of the high-security group should be strictly controlled in accordance with the principle of fairness and the idea of "suppressing the peaks and filling in the valleys", stabilizing the basic pension standard of the middle-security group and raising the basic pension standard of the low-security group, as well as guiding the public to form rational expectations. The public should be guided to form rational expectations.

It is reported that the Ministry of Human Resources and Social Security will take multiple measures to enhance the fund's support capacity. It will continue to increase the expansion of social insurance collection; raise the level of coordination, the implementation of the national coordination of basic pensions; further broaden the fund financing channels, and start the implementation of the investment and operation of the pension insurance fund.

Additionally, the fund-raising capacity will be strengthened by increasing financial subsidies and allocating state-owned assets to enrich the social security fund. It will implement a policy of gradually delaying the retirement age; develop a multi-level pension insurance system and promote the development of corporate and occupational pensions.

Related news: pension rolling balance of more than 3 trillion is still not bottomed out in the heart of the financial subsidies of more than 2 trillion

A few days ago, the Ministry of Finance announced the 2014 national social insurance fund final accounts data. Overall, the rolling balance of the national social insurance fund is more than 5 trillion yuan, the "bottom" is still very thick.

However, the release of the data has triggered heated debate in the community, especially on the income and expenditure of the basic pension fund for employees, and some media even exclaimed that "the pension income is not enough to cover the expenditure of the gap is very large". So, the pension income and expenditure situation in the end how? In the end there is no funding "gap"? The future of the people's pension is not guaranteed?

Pension entitlements have increased over the years and the aging of the population is making China's pension system "invisible debt" accelerated manifestation.

Because of the very low level of the pension fund, although the establishment of the provincial transfer system, but for some less developed regions, especially labor exporting regions, the pressure of pension expenditure is very large, must rely on financial transfers in order to "guarantee the release". The newspaper recently reported this situation, triggered the public for the decline in fiscal growth under the pension issue of concern.

Excluding financial subsidies, pension insurance spending is higher than revenue, and there will be a shortfall in the future

The national social insurance fund budget mainly includes pension insurance, medical insurance, industrial injury insurance, unemployment insurance, maternity insurance and other funds, which are often referred to as the "five insurance". Among them, the basic pension insurance fund is the "big head", the amount of money accounted for about 60% of the entire social security fund.

First, let's take a look at the relevant data of the basic pension insurance fund for enterprise employees:

In 2014, the current year's income of 2327.3 billion yuan, an increase of 11.9% over the previous year. Among them, the basic pension insurance premium income of 187.26 billion yuan, an increase of 10.1% over the previous year. Expenditures for the current year amounted to 197.97 billion yuan, an increase of 18.6% over the previous year. Among them, the basic pension expenditure was 190.45 billion yuan, an increase of 18.4% over the previous year. The balance of income and expenditure for the year was 347.6 billion yuan, and the rolling balance at the end of the year was 303.76 billion yuan.

"Calculating the big account, the total income of the pension fund last year was 2.3 trillion yuan, the expenditure was less than 2 trillion yuan, and there was a balance between income and expenditure." Bai Jingming, deputy director of the Ministry of Finance, analyzed that year's balance of 347.6 billion yuan, coupled with the balance rolled over from previous years, the total remaining funds of more than 3 trillion yuan, pension payments should not be a problem.

Since there is a balance in the pension fund year after year, and the "surplus money" is as high as more than 3 trillion yuan. Why is there still a rumor in the community that the pensions are not enough to cover the expenses and that there is a big gap?

In fact, the differences are in the "detailed accounts". There is a view that, although last year's total income from pension insurance is 2.3 trillion yuan, but if we exclude the part of the financial subsidies, the net income from insurance premiums is 1.8 trillion yuan, but the expenditure is 1.9 trillion yuan, obviously "not enough to cover the expenditure". In addition, the growth rate of income is 11.9%, the growth rate of expenditure is 18.4%, so continue to "spare money" will be less and less, and one day there will be a gap in the pension.

"The same problem, put in a different time period or under specific conditions to consider is likely to reach different conclusions." According to Bai Jingming, the current source of funding for the pension fund is mainly made up of unit contributions, individual contributions and part of the financial arrangements. Together, these three parts of the income is certainly "more revenue than expenditure". At this stage, there is no need to worry too much about funding.

Expenditure factors increase, at this stage can not rely on increased contributions to achieve balance of payments, to promote the national co-ordination

Data show that the "Twelfth Five-Year Plan" period, the basic pension insurance fund for employees' expenditures increased by an average of 18.6% per annum, an average annual growth rate of 12% of the income, expenditures than the increase in income by 6.6 percentage points. The increase in expenditure was 6.6 percentage points higher than the increase in income. The expenditure growth rate is significantly higher than the income growth rate, which means that the money flows in slowly and out quickly, even with the financial subsidies, it is difficult to realize the self-circulation.

What are the reasons for the pension imbalance? "The main factor is that pension spending is on the rise, while pension contributions have not improved." Zheng Bingwen, director of the World Social Security Research Center of the Chinese Academy of Social Sciences, analyzed that our social pension insurance system was established in the 1990s, before that enterprises and employees did not have pension insurance contributions, but these workers into the new pension insurance system, retirement is to receive pensions from inside. As these "old people" gradually enter retirement age, the number of pensioners increases, and the gap caused by non-payment of contributions begins to appear. Also, the level of protection has increased significantly over the years, the average monthly level of basic pensions for enterprise employees reached more than 2,200 yuan in 2015, 1.7 times that of 2010, and this piece of expenditure is also growing.

"The statutory rate of China's pension insurance is 20% of the wage income paid by enterprises and 8% paid by employees, amounting to a total of 28%, which also belongs to a higher level in the world, and it is unrealistic to balance revenues and expenditures by adjusting the rate upward. Moreover, the previous generation did not pay the contributions caused by the 'hole', all by the next generation to make up for the words, will cause the burden of active employees to pay too heavy, intergenerational inequity." Zheng Bingwen said.

It seems that by raising contributions to cover expenses to achieve a balance of income and expenditure, at this stage is difficult to realize, financial subsidies or their financial support is necessary. In some places, there is a pension contribution is insufficient, in order to "guarantee the release" are by the financial "bottom", the difference in the money to make up. But this "underwriting" can only save a momentary emergency, the risk is greater in the long run. Because the pension annual contributions, how much to receive, how much need to make up for the financial, there is not an accurate measurement. How much difference to make up for how much, take one step at a time, not only makes it difficult for the financial "bottom", but also let the public heart "bottomless".

Finance Minister Lou Jiwei said, social insurance and personal interests are closely related to the design of policies to take into account the demographic changes, the need to think back 50 years or longer. Pension insurance must adhere to the actuarial balance, can not leave the gap completely to the public **** finance, in fact, left to other taxpayers, otherwise not only unfair, but also bring the public **** financial unsustainable.

The imbalance between pension revenues and expenditures is more evident in the "books" of local governments. The Ministry of Human Resources and Social Security released "China's social insurance development annual report 2014" disclosed that in 2014, Hebei, Heilongjiang, Ningxia, three provinces and regions of the enterprise workers' pension pension expenditure is greater than the income, revenue and expenditure balance pressure. In Guangdong, Shandong, Beijing, Zhejiang, Jiangsu and other provinces and cities, however, the accumulated pension balance exceeded 100 billion yuan.

Zheng Bingwen said that under the condition of not realizing the national coordination, the annual balance is deposited in the developed regions, and the less developed regions can't collect enough to cover the expenses, which puts more pressure on the finances of the less developed regions.

"The national coordination of basic pensions, one of the main ways to realize the balance of income and expenditure, should be accelerated." Zheng Bingwen believes that according to the current management system, the pension insurance fund is distributed at the provincial, municipal and county levels, of which there are more than 1,000 co-ordination units at the municipal and county levels. The level of co-ordination is too low, which is rare in the world. It brings many drawbacks, such as serious regional differentiation of pensions, difficulties in cross-regional mobility of labor, and increased risk of localized security.

13 years of financial subsidies for pensions more than 2 trillion

Ministry of Human Resources and Social Security spokesman Li Zhong said on the 20th in response to the issue of pension payments in some provinces, said that since 2014, affected by a number of factors, the current pension expenditures greater than the income of the fund collection of the provinces increased. The main reason is that the level of pension treatment has been adjusted continuously, the fund expenditure increased; the effect of population aging gradually appeared, the number of retirees in the insured personnel increased at a higher rate than the number of people who paid contributions; the dependency ratio in some areas is higher, the burden is heavier.

The reporter consulted the statistical bulletin of the past years and learned that since 2002 to 2014, all levels of financial subsidies to the basic pension insurance fund has exceeded 2 trillion yuan, of which the central government accounted for the main part.

Li Zhong said, from the pension insurance fund income and expenditure situation, in the first 10 months of this year, the total income of the national fund exceeded the total expenditure of more than 210 billion yuan, the vast majority of provinces the accumulated balance of the fund is more than eight months of the fund payment, the fund is running smoothly in general, and can ensure the payment of current pension insurance benefits.

Li Zhong said on the 20th that financial subsidies are an important aspect of the pension insurance fund's financing channels. For a small number of old industrial base provinces with large historical debts and weak fund payment ability, the state will continue to increase the central financial subsidies.

Since 1995, when the "combined accounts" pension system was put on trial at the local level, and then standardized across the country in 1997, the government has been trying to pay back the cost of the conversion by maintaining high rates and setting up transitional pensions, both of which are "internalized". Conversion costs. Judging from the current trend of pension imbalance, there is not much room left for this approach.

While 22 provinces across the country will not have enough income from contributions to cover current expenses, this will not have a direct impact on the current payment of pensions, as financial subsidies are a legal source of funding for pensions, which must be added to financial subsidies at all levels in order to maintain a balance between revenues and expenses.

The Ministry of Human Resources and Social Affairs has listed in its annual statistical bulletin the financial subsidies to the basic pension fund for urban workers at all levels since 2002. In 2002, the central government's subsidies amounted to 40.82 billion yuan, and by 2014, financial subsidies to the basic pension insurance fund at all levels had reached 354.8 billion yuan, according to the statistical bulletin.

Calculated based on the data released in the statistical bulletin, the amount of subsidized pensions at all levels of finance reached 207.48 billion yuan during the 13-year period from 2002 to 2014.

In terms of the growth in the amount of subsidies, it took nine years to go from 40 billion yuan to 200 billion yuan, and after surpassing 200 billion (227.2 billion yuan) in 2011, it surpassed 300 billion yuan (301.9 billion yuan) in 2013. According to the 2015 Budget Situation of the National Social Insurance Fund released by the Ministry of Finance, this year's budgeted financial subsidies amounted to 367.12 billion yuan.

In terms of the structure of financial subsidies, the central government is the absolute main force. According to the Annual Development Report on Social Insurance in China (hereinafter referred to as the Report) released by the Social Insurance Business Management Center of the Ministry of Human Resources and Social Security (MOHRSS) in July this year, the central government's share of the total income of the entire enterprise pension insurance fund has remained at 12-13 percent since 2009, with local finances accounting for 1 to 3 percent of the total.

From the data released in the Report, unlike the sharp increase in central financial subsidies, local financial subsidies for pensions have shown a slight downward trend, from 31.8 billion yuan in 2009 to 28.2 billion yuan in 2014.

The report showed that in 2014, local subsidies for corporate pension insurance amounted to 28.2 billion yuan, accounting for 1.2 percent of the total revenue, and local financial inputs of more than 1 billion yuan were made by seven provinces: Chongqing, Shanghai, Liaoning, Tianjin, Jiangsu, Hubei and Hunan.

Finance Minister Lou Jiwei said recently that the next step should be to enrich the social insurance fund revenue channels, and gradually increase the proportion of state-owned capital gains paid to the public **** finances, and in 2020 to 30%, in addition, but also to transfer part of the state capital to enrich the social security fund.

From "implicit compensation" to "explicit debt repayment"

"Unified Accounts Combination" system was established at the beginning of the way to deal with the transition cost is called "the system to digest".

A person involved in the design of the system said that when choosing the mode of the "united accounts" system, the issue of the cost of conversion had been fully considered, and three repayment modes were proposed: one was entirely borne by the treasury; the second was to allocate part of the state-owned assets; and the third was to be digested by the system. In view of the poor financial situation at the time, the allocation of state-owned assets in the operation of the lack of means, and ultimately chose the third way, through high rates to increase the fund income and transitional pensions to compensate for the empty accounts of individuals.

From the current operation of the pension fund, this mode of "internal digestion" has encountered unprecedented difficulties.

Back in 2008, with the support of the relevant state departments, Zheng Gongcheng, a professor at Renmin University of China, participated in the completion of China's Social Security Reform and Development Strategy (hereinafter referred to as the Strategy) with more than 200 experts and professors and 200 officials at all levels across the country***. At that time, they had already suggested that the cost of conversion was the bottleneck restricting the reform and healthy development of China's basic pension insurance.

The Strategy said that, under the premise of ensuring the payment of pensions, the cost of conversion has not become visible, but has brought long-term invisible pressure on the state treasury, and although at the present stage there is a certain degree of subsidy to the pension insurance fund at all levels of finance, which objectively resolves part of the cost of conversion, it has not been clarified in terms of its nature and purpose, and it is a kind of "implicit supplementation "

China's pension fund has been subsidized to a certain extent by financial institutions at all levels.

Li Zhen, a professor of public **** management at Renmin University of China, argued that although the treasury has been subsidizing the pension system from less to more since 2000, the cost of the conversion has been a muddled account, and no one can say whether the subsidy is enough to meet the government's obligations.

Li Zhen suggested that the government's responsibility for pension costs caused by the transition of the economic system should be clarified as soon as possible, the total amount of the government's responsibility should be calculated and a mechanism should be set up for repaying the debt.

The Strategy suggests that the responsibility of financial funds for absorbing the costs of restructuring should be clarified as soon as possible, so that the financial subsidies can be changed from implicit subsidies to explicit subsidies, and at the same time the proceeds of state-owned assets should be utilized to broaden the channels of dissolution. (END) (National Soochow Finance synthesized 21st Century Business Herald, First Financial Daily, People's Daily, etc.)