Can the Social Security Fund Help You To Survive the Old Age?

  • Author: 土饭团(文团)
  • Translator: Jenny Ball

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After years of diligent work, all we hope is to have a stable life in the old age after retirement and this is the simplest wish of every civilian. This is the duty of the government to every taxpayer to establishes an efficient and complete social security system and it is also the most basic responsibility. However, in China under the rule of CCP, the issue of pension fund deficits has been frequently raised in recent years. Even CCP’s government Academy of Social Sciences released an actuarial report on China’s pension funds in 2019.

As per the report, it is predicted that by the year 2035, all pension balances will be exhausted. In China under the CCP, if a question can be raised, it indicates the trend that the problem could be deteriorating, and if the same problem has been aired for several consecutive years, it indicates that the problem has become quite serious. The current younger generation of people born in the 80s, 90s, 00s, or even 60s, 70s, who are facing retirement earlier than the younger generation. Under the CCP’s current social security model, after retirement in the future, whether or not they would be able to receive a full amount of old-age pension every month to enjoy the old age until the end of their lives, it is still a question.

The social security fund is what we usually call the five insurances. Among them, pension accounts for about 70%, and medical insurance accounts for about 27%. The sum of these two accounts for 97% of the total social fund. In March this year, the CCP State Department released a report in title of The Implementation of the Central and Local Budgets for 2020 and Draft of 2021 Budgets for the Central and Local. Such report is published in the first quarter of each year.

Let’s take a look at the income and expenditure data of the social security fund in the past three years. In 2018, China’s social insurance fund revenue was 7.26 trillion yuan, expenditure was 6.46 trillion yuan, and the balance of income and expenditure that year was 806.277 billion yuan. In 2019, the income was 8.08 trillion yuan and expenditure was 7.49 trillion yuan. The balance of the year was 585.486 billion. In 2020, the expenditure was 7.88 trillion yuan, and the income and expenditure gap that year was 621.117 billion yuan.

On the surface, the data seems to be pretty good. There were surpluses for the year 2018 and 2019, including the data over the years that were not listed. Except for the first loss in 2020 due to the impact of the epidemic, the fund was increasing over the years. It seems reasonable, but in fact, it was achieved through financial subsidies that the social security fund could maintain a surplus every year.

According to the data in the report, fiscal subsidy income was 1.68 trillion in 2018 and 1.94 trillion in 2019, and in 2020 it has exceeded 2 trillion, reaching 2.09 trillion. If fiscal subsidies are removed, it will only be from the social security income of the year. Calculated in terms of expenditure, then social security has been unable to make ends meet since 2014. Through simple calculations, it can be concluded that comparing with the net income of social security in recent years, the huge financial subsidies accounted for as much as one-third, which shows that social security has been highly dependent on financial subsidies.

So how has CCP dealt with the increasingly serious situation of social security fund? One is to transfer state-owned enterprise capital to supplement social security funds; and the other is to delay retirement. These two methods are more feasible. Others measures include increasing the payment rate and reducing the amount of defray. It is unrealistic to continue to increase financial subsidies because what is already being done is to reduce taxes and fees. CCP is also aware that if the pensions to the people can’t even beat the annual CPI (although the data is falsified, it’s okay as long as it won on the surface) and the amount of money in hand was reduced, then people definitely have to worry about their livelihood.

However, the above two measurements are only to prolong temporarily and cannot solve the fundamental problem. Anyone who understands the social security model should know that the old age pensions are not from the save that they paid while working, but from the social security payments of the young people who are working now. Such a system of rob Peter to pay Paul.

To operate and maintain such a model requires an indispensable factor, a sufficient population, or a sufficient number of people in work force to pay the social security. According to China’s sixth national census report, for the age composition, the peak birth period was in the 1960s, which was so called the “three-year difficult period of natural disaster” as CCP claimed, actually it was man-made famine. From 1962 to 1979, the number of births in the ten years was approximately 245 million. These are the people who are about to face the retirement. With more than 20 million annual addition of retired people, can you imagine how much pressure social security fund is facing.

On the other hand, according to the data in the report, the total number of people born in the 1980s was 228 million, 174 million in 90s, and the 147 million in 2000s. According to the data of birth rate released by the CCP Statistics Bureau over the years, the population born after the 2010s was From these data, it can be seen that the population of the post-2000s is only 64.5% of the post-80s. Since the millennium the population has dropped by more than a quarter by 2020 compared with the previous 20 years.

Under the CCP system, education, medical care, housing and other issues have basically emptied the people’s pockets. People are under huge pressure of livelihood. Naturally the fertility rate has declined rapidly. According to the census report and the data released by the Health Commission in recent years, China’s total fertility rate is around 1.5, and the lowest in the major cities is only about 0.7. From a microscopic point of view, the family structure is mostly 4-2-1, or 4-2-0. The social security model is unsustainable while underpopulated. CCP also intends to learn the three-pillar pension model commonly used internationally. It is not a problem in itself to combine enterprise annuities and commercial pensions, but as long as the CCP is still there, the system does not change, there won’t be any increasing in various welfare and wages. Yet to pay corporate annuities and buy commercial pension, you will have less money to spare and understandably no willingness to give birth. Therefore the fundamental population shortage problem won’t be solved. It will only end up with more and more ordinary old people have nothing to support their old age.

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Learallings
18 days ago

nice

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