Government moves to solve pensions shortfall

Rust belt

The northeastern provinces-Liaoning, Jilin and Heilongjiang-were once known as the "Republic's eldest son" because of their crucial status in the national economy as a base for heavy industry.

But the region became a rust belt after large numbers of State-owned coal mines, steel plants and oil refineries were idled amid sweeping economic reforms in the 1990s.

The former employees, mostly born in the 1950s and '60s baby booms, have now surpassed the retirement age for blue-collar workers-55 for men and 50 for women-and large numbers of them have started collecting the State pension.

Meanwhile, the job evaporation in the northeast has seen many young people move to Beijing and other economically vibrant regions, meaning they do not contribute to the pension fund in their home province.

Moreover, their numbers are fewer because many were born after the one-child rule was introduced in 1980.

In the first decade of this century, Heilongjiang saw a net outflow of 1.26 million residents. Meanwhile, starting in 2010, an average 100,000 people moved elsewhere every year, according to the provincial statistics bureau.

More than 30 percent of those people are age 20 to 30, and less than 20 percent have reached retirement age, it said.

The workers' migration to the coastal regions has created a huge discrepancy in the health of pension funds in different parts of the country.

In 2017, Yin Weimin, a former minister of human resources and social security, said that at 1.3-to-1, Heilongjiang had the country's lowest contributor-collector ratio, suggesting immense payout pressure.

However, the ratio was 9-to-1 in Guangdong province, the manufacturing and trading hub in South China, he said.

Experts said that in addition to putting pressure on fund payouts, the fragmented system has caused problems such as a gap in benefit collections, as the contribution rate varies from area to area and the benefits are calculated according to local income levels.