China’s Social Security Fund Shrinking as Over 96% Money in Banks08-03 13:19 Caijing
China’s aging population may find their money in the National Social Security Fund (SSF) getting smaller and smaller as over 96% of the assets are put in banks, calling for a more diverse investment portfolio that will reduce depreciation risks from the country’s rising inflation.
About 38.44% of money in the fund was invested in demand deposits while 58.01% invested in term deposits and 3.55% in others.
The NSSF which is intended to mitigate the looming aging crisis in the country and help provide financial protection for the country’s pensioners, recorded a cash balance of 3trillion yuan(474.2billion U.S. dollars) by the end of 2011.
The guideline on the fund management by the National Council for Social
Security Fund (NCSSF), is to pursue capital increment while ensuring security and liquidity of the assets.
While the fund can be pretty safe in banks, it is shrinking “shockingly ” on negative real interest deposits rates, said Deng Bingwen, a global social security researcher at the Chinese Academy of Social Sciences.
“Losses of the fund were estimated at tens of billions in 2010 and hundreds of billions in 2011, ” Deng said.
China’s CPI, the main gauge of inflation, grew a 3.3% compared with the previous year, while the interest rate for demand deposits was only at 0.36% and 1.91%-2.25% for one-year term deposits.
Things became worse in 2011 when the CPI growth rose to 5.4% and the interest rates for the demand deposits and one-year term deposits climbed to 0.40%-0.5% and 2.6%-3.1% respectively.
“It’s just irresponsible to put safety ahead of returns,” Deng said, “We should do our best to protest the pensioners’ money from suffering losses.”
Editors’ Picks »
- 1China to Introduce Its 401K Tax-Deferred Pension Scheme in 2014
- 2China Adds "Debt Issue" in Assessing Local Officials, Shifts away from GDP Obsession
- 3Ten-Year-Old Chinese Girl Abuses Baby, Shocks Nation
- 4China Makes a Key Step Towards RMB Deposit Rate Liberalization
- 5Wang Jianlin Eyes the China's Growing E-Commerce Market
- 6Five Chinese Banks to Issue CNY19Bln Interbank CDs
- 7Conference Maps Nation's Path for 2014
- 8The Future of E-Commerce in Asia-Pacific
- 9Shanghai to Have World's Second Largest Disney Theme Park in 2015
- 10China’s Online Retail Sales to Top CNY1.8Tln This Year: Commerce Minister