(Adds minister’s quote, background)
BEIJING, April 3 (Reuters) - China’s state pension funds will likely have a funding gap in future due to growing obligations, Vice Finance Minister Wang Baoan said on Friday.
China has struggled to keep its pension schemes adequately funded, with local governments and companies sometimes avoiding contributions.
Analysts have long warned about China’s state pension crisis and the severe funding shortage, with some estimating that the cash shortfall could rise to as high as nearly $11 trillion in the next 20 years.
“The idea that our pension funds will have a funding gap, I think that is possible,” Wang told a press briefing on Friday.
In a move to relieve some of the financing pressures on the funds, China decided to expand the investment scope of its national social security fund this week to allow it to buy more investment trusts, as well as corporate and local government debt, he said.
At present, pensions funds have been restricted to investing only in high security, low yielding assets.
Yin Weimin, minister of human resources and social security, told reporters in March that the pension funds drew an income of 2.3 trillion yuan ($371.30 billion) in 2014, exceeding expenditure of 2 trillion yuan for the year.
But he also warned then that the proportion of Chinese over the age of 60 will rise to 39 percent of the population in coming years, from 15 percent now, putting pressure on pensions. ($1 = 6.1945 Chinese yuan renminbi) (Reporting by Koh Gui Qing; Editing by Richard Borsuk and Muralikumar Anantharaman)