Pension reserves in majority of China's provinces fall below government threshold

Pension reserves in a majority of Chinese provinces have fallen below a key government threshold as growing deficits from a rapidly ageing population threaten the system's long-term viability.

China has two major pension schemes in the country. One scheme is compulsory for urban employees and public servants, while the other one serves other urban residents and the rural population, NIKKEI Asia reported.

The reserves of the urban employee system, which is the larger among the two, has fallen around 10 per cent to 4.83 trillion yuan (USD 754 billion).

The payout capacity of the fund has also been staggering as the reserve in the system has the potential to cover 11.3 months in payouts during 2020 against the potential of 16.4 months five years ago, NIKKEI Asia reported.

The standard of payout is considered to be nine months by the state-affiliated Chinese Academy of Social Sciences.

16 out of 31 provincial-level regions, including highly developed areas like Shanghai, have dipped below the threshold, NIKKEI Asia reported.

Meanwhile, Beijing is also considering reforms to shore up the pension system as the working-age population has been shrinking the country.

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.

( With inputs from ANI )