context: After many years of delay and difficulty, the central government has published its plans to adjust regional disparity in pension funds. In 2017, 13 provinces reported fund deficits and seven provinces had large surpluses.
State Council issued ‘Notice on setting up central adjustment system for basic pension insurance funds’ effective 1 July 2018
- the central adjustment fund is fed by provincial fund contributions
- provincial contribution = (provincial average salary * 90 percent) * number of insured employees * contribution rate
- contribution rate will start at 3 percent and will be adjusted upwards accordingly
- the central adjustment fund will be fully disbursed each year
- disbursed funds to a province = verified number of retirees in the province * national average disbursement per capita
- national average disbursement = central adjustment fund total volume / verified number of retirees nationwide
- the fund is a part of the national pension insurance fund and is included in the central account for social insurance funds
- existing policies on central subsidies will remain unchanged
- after disbursement of the central adjustment fund, any remaining shortages in provincial pension funds are the responsibilities of those provinces
- safeguards
- provinces (regions and municipalities) are to unify regulations on pension insurance, insurance payments and reimbursement, fund utilisation, budgets and management, and specify responsibilities for local governments at all levels
- provincial governments and departments of finance and human resources and social security are to enhance budget planning and verifying
- provincial governments will be evaluated based on their performance in fund management and policy implementation
- central and local governments are to share information and data though national information systems and the database of pension insurance and central adjustment funds