Since the State Council announced the transfer of parts of the state-owned equity for Social Security Fund (SSF) in 2017, assets have climbed to 840 billion yuan ($120 billion). Along with financial allocations and pensions entrusted by local governments at the beginning of the establishment of the fund, its total amount has added up to 4 trillion yuan ($571.6 billion).

Set up in 2000, the SSF is used to supplement and adjust social security expenditures, such as pension insurance, during peak periods of population aging. The fund consists of central budgetary allocations, state-owned capital transfers, fund investment income and funds raised by other means. These funds are set aside to support social security payments through periods when population trends bring the fund down further than its contributions.

This kind of arrangement establishes a reliable source for China's social security system. In case of an inadequate pension fund in some provinces, the SSF can provide timely support.

After the establishment of the SSF, its annualized return on capital markets has exceeded 15 percent. Moreover, capital transfer and other institutional arrangements have ensured the sustainability of social security funds, proving that China's current pension system is fully safe and reliable.

(This is an edited excerpt of an article originally published in China Youth Daily on December 24, 2019)