China to raise retirement age to ease pressure on pension fund
Ageing population, limited resources and a large number of people uncovered by social benefits may prompt China to raise the retirement age to ease pressure on pension fund which is already facing a shortfall.
Beijing: Ageing population, limited resources
and a large number of people uncovered by social benefits may
prompt China to raise the retirement age to ease pressure on
pension fund which is already facing a shortfall of about USD
194 billion, experts have said.
The pension fund has a shortfall of 1.3 trillion yuan
(USD 194 billion), Zheng Bingwen, of the Chinese Academy of
Social Sciences told state run `China Daily` today.
To deal with both the pension system`s problems and an
ageing society, Zheng said China like France desperately needs
to raise the retirement age.
Since life expectancy is increasing, many people can still
work beyond 65 or even 70, something that is quite common in
the West, he said.
"Besides, if there are more people working, more fortunes
will be created and more money could be distributed to workers
and retirees," he said.
Experts say that pension system of the world most
populous country has to face the fact that people are getting
old before they have made enough money to retire.
The country has a population of more than 1.33 billion,
but only about 30 per cent of them are covered by the pension
system, a report by the `Daily` said.
Three out of 10 Chinese will be 60 years or older by
2040, a United Nations forecast said.
According to Lin Yi, a specialist in social security at
Southwestern University of Finance and Economics, China`s
pension system is unlike those of many European countries and
faces grave challenges from the population ageing and longer
That challenge, should not be underestimated, he said.
"The pension fund scale should be expanded because an
aging population means that more people will want a pension
after they retire," he said adding that the system be made to
cover more people with more diversified investment forms to
ensure its sustainability.
Shanghai city, which has the highest number of pensioners
in China has already started trying out one such programme in
October, where urbanites can delay receiving retirement
benefits and continue working after retirement age.
Shanghai`s old population is about twice the national
Senior residents now account for more than 20 per cent of
the city`s population and there are more than three million
registered residents older than 60, according to official
survey conducted recently.
In Shanghai, one retired worker is supported by 1.5
taxpayers, while the national average is 3.5 taxpayers for
every retired person.
Some analysts estimate that if the retirement age were to
be extended by a year, the social security funding shortfall
would be cut by 20 billion yuan.
To maintain the pension system, Zheng Bingwen said a more
unified system would help China avoid the risks that the
dispersed pension system can pose.
"A multilevel system brings potential fiscal, social and
even political risks," he said.
China`s pension plan currently has four different modes
of operation, which cover rural residents, civil servants,
employees of public institutions and enterprise employees.
The more money Chinese workers put into their retirement
account, the more they get after retiring, he said.
On an average, Zheng says, a civil servant can get twice
as much as a company employee after retirement, and this is a
possible hazard on the road to social stability.
"All people, whether they are civil servants, urbanites
or rural people, should be covered by a unified pension scheme
where pensions do not differ a great deal," he said.
The government plans to cover all residents with the
pension system by 2020.