Rising pension burden poses a problem

Premier Li Keqiang has said in the Government Work Report that basic pension standards will be raised by 10 percent this year. Although this reflects the government's concern about retirees, it has sparked a debate on the sustainability of the pension scheme because the authorities have also decided to extend the retirement age.

According to the latest official data, in 2013 the national average pension was 1,914 yuan ($305), or about 43 percent of the average monthly wages before retirement, and the accumulative balance of the national pension fund was 2.83 trillion yuan, or 5 percent of GDP. The overall pension income and expenditure in 2013 was 2.17 trillion yuan and 1.85 trillion yuan, accounting for 3.8 percent and 3.2 percent of GDP.

Urban pension funds are managed by local governments, not the central government, and there are 2,000-odd fund pools nationwide. Compared with some other countries, this is a low social pooling level and can seriously harm the financial sustainability of the pension insurance system. Specifically speaking, under the current system, two explicit pension debts have become a cause of concern.