Cabinet officials grilled for divided pension programs, depreciating funds

Residents of a home for the elderly in Feixiang county, Hebei province, share a laugh in this undated file photo. China's pension system faces pressing challenges as the number of people of working age continues to fall. [Pan Songgang for China Daily]

Due to these differences, it is very difficult for people to transfer their pension program from one province to another when they move, said Zheng Gongcheng, a professor with Renmin University of China and an NPC Standing Committee member, at the review.

Yin Weimin, human resources and social security minister, told lawmakers that unifying these pension programs is a priority and the government will work out a plan next year.

How to divide the power and liability between the central and local governments as well as among different local ones is the most difficult part, Yin said.

The plan, still being drafted, will unify the rules across the country on how to set the cost and benefits of pension programs but also allow provincial governments to adjust according to local situations, he said.

Next year the government will also start to include the 40 million civil servants, Party officials and public institution staff in the social security programs.

Hao Ruyu, an NPC Standing Committee member, noted that the money in people's social security accounts has depreciated due to its limited investment options.

The funds, mostly in the hands of provincial governments, can only be saved in banks or used to buy treasury bonds, which are safe but have low returns.

Yin confirmed that last year the money in the social security accounts totaled 3 trillion yuan ($489 billion) but its annual interest rate was only about 2 percent, lower than CPI growth.

The government plans to diversify the investment but has yet decided how to do it, he said, adding that since the money is huge and scattered among different local governments, the central government has to be very cautious.

Finance Minister Lou Jiwei told lawmakers that the central government is working to inject more profits from State-owned enterprises into public services including pension programs.

So far only about 10 percent of profits from the State-owned companies, roughly 100 billion yuan, have been handed to the treasury and the rate will increase to 30 percent in 2020, Lou said.

In recent years, the top legislature has often invited cabinet officials to attend inquiry meetings during its bimonthly sessions, as an important way for the legislature to supervise the government.