Shanghai facing pension problem

Shanghai is said to be planning to make up its social security fund gap with proceeds from land auctions and state-owned enterprises.

The local authority is researching the feasibility of taking part of the proceeds from state-owned enterprises and the sale of land plots to make up the funding gap, but no details are available, the China Economic Weekly magazine reported yesterday, citing unnamed sources from the local reform and development commission and local state-owned assets supervision body.

Shanghai Human Resources and Social Security Bureau said yesterday it was unaware of the issue.

The social security fund gap means that money currently paid into the fund by workers and companies is not enough to pay for retired people's pensions.

Shanghai Party Secretary Yu Zhengsheng said in January that the city was putting in more than 10 billion yuan (US$1.5 billion) a year from its fiscal revenue to make up for the shortfall.

Shanghai allocates about 10 percent of its city-level fiscal income to the social security fund, Yu told city lawmakers last month.

Shanghai has 3.4 million retirees and the figure is set to rise due to its aging population.

According to the government, Shanghai is seeking the sustainable development of the city's social security fund. This involves researching plans to set up diversified capital channels for the fund such as land, state-owned enterprises and fiscal income. Maintaining and increasing the value of the fund is another means sought to support the fund's growth.

Shanghai retirees' social security income is less than the national average, according to an earlier survey, and they face the twin problems of rising inflation and the higher costs associated with living in the city.

A source told Shanghai Daily yesterday that one means to make up the gap could be increasing the investment channels of the fund to generate more returns.

At present, the fund is put in bank deposits and treasury bonds only.

"The city's need to make up the gap is undeniable," the source said.

"But it is complicated and the solution has yet to be finalized."

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