Worrying trend for pensions

Raising the return ratio of social insurance funds is necessary in order to improve the country's social insurance system, but fundamentally, the problem is the over-issuing of money, says an article in Beijing News. Excerpts:

The story of an old farmer in Zhejiang, who receives a monthly pension of 2 yuan after making a one-time pension program payment of 200 yuan ($31.7) 17 years ago, has caught widespread attention. And it's probably not only the old and new rural insurance pension programs that are flawed, but also the whole social security system. Till the end of last year, the total volume of social security funds surpassed 2.4 trillion yuan, more than 90 percent of which is reserved as bank deposits, which means the social security fund has been devaluing due to the long-term high inflation and negative interest rates. However, even if only part of the funds had been allowed to enter the stock market, the currently sluggish stock market can hardly be perceived with too much optimism.

In 1990, the amount of broad money supply was 1.53 trillion yuan, the narrow money supply was 695 billion yuan and the cash in circulation was 264.4 billion yuan. Last year, broad money supply had soared to 85 trillion yuan, the narrow money supply to 28 trillion yuan and the cash in circulation to 5 trillion yuan. Real life experiences show that in 1990 several hundred or so yuan a month could provide a decent living, two decades later, ten thousand yuan a month is not enough. And if the government continues to let the over-issuing of money continue, the hundreds or thousands we pay today for our future pensions will also be likely to end up being returned as just a little-better-than-nothing amounts. As China's society is aging it is high time the money over-issuing problem was resolved.

(China Daily 04/05/2012 page9)