China is capable of ensuring full and punctual payment of basic pensions even after reducing business contribution to social insurance schemes, Mr Zhang Jinan, Minister of Human Resources and Social Security has said.
According to results of repeated calculations, income for the social security funds will still exceed expenditure despite reducing employers' share of contributions to urban workers' basic aged-care insurance, he said, according to a report by Xinhua News Agency.
Mr Zhang also said that China's nominal enterprise contributions to social insurance schemes are comparatively high and have some room for reduction.
The Chinese government has been reducing employers' contributions to social insurance schemes as part of broader efforts to ease firms' financial burdens by further cutting taxes and fees on businesses.
"Lowering the share borne by employers for urban workers' basic aged-care insurance can vitalise firms to expand production and employment, thus introducing more insurance payers and creating a bigger social security fund 'pie' to form a virtuous circle and enhance the system's sustainability," Mr Zhang said.
Efforts will be stepped up to replenish social security funds through the injection of state capital, he said. The government announced a plan in 2017 to shift 10% of the equity in selected state enterprises to the social security fund.
Mr Zhang echoed statements made last week by Minister of Finance Liu Kun on the sustainability of Chna's state run basic pension system. Mr Liu had said, "Nationwide, China can ensure that the pension is paid on time and in full."
Last year, the income of the corporate pension funds totalled CNY3.6trn ($536bn), while total expenditure stood at CNY3.2trn, leaving a balance of CNY400bn, he said. The cumulative balance of pension funds stood at CNY4.6trn at the end of last year, he added.
The ministers were rebutting reports that the Chinese pension system, in its current form, is not sustainable. The basic pension system is managed at the provincial level. Nearly half of China's provinces are forecast to report an operating deficit in their basic pension funds by 2022, compared to six in 2015, according to a report by the prestigious think tank, the China Academy of Social Sciences.
To resolve the disparity between richer provinces and less developed provinces, China established a system last year allowing the central authorities to adjust corporate pension funds at the national level, Mr Liu said, adding that 22 provinces benefited from the arrangement last year.