Apr 11, 2019 (China Knowledge) - China's wealthier provinces and municipalities have been asked by the central government to contribute to a central adjustment fund that would be redistributed to other provinces and municipalities to make up for shortfalls in their pension funds amid growing regional shortfall in the country's pension system.
The central adjustment fund which was set up in July last year aims to raise RMB 484.5 billion from the pension funds of the country's 31 provincial level government to be redistributed to the regions facing the greatest pressures in their pension funds.
Wealthier regions such as Shanghai, Guangdong and Beijing will be contributing more than they receive while regions such as Liaoning and Heilongjiang in the northeast rustbelt region will be net beneficiaries.
The central government in China has been working to change the country's pension system over the last few years to reflect the changes in the country's economy and demographics.
Millions of workers have migrated to more prosperous cities where they have spent years contributed to that region's pension fund creating a massive surplus while their home regions face shortfalls in their own pension funds due to the exodus of migrants.
The central adjustment fund would now receive payments from each region based on their number of employees and average salaries before redistributing these funds to other regions based on the number of retirees in each area.
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