Advertisements
//
you're reading...
Human Rights & Social Issues

China Faces Pension Crisis


Study predicts a USD 2.8 trillion pension shortage in China next year.

By the year 2013, China will face a pension gap of RMB 18.3 trillion (about USD 2.8 trillion), says  Ma Jun, chief economist and investment strategist of Deutsche Bank Greater China, and Cao Zhengyuan, chief economist of Bank of China,  in a recent report titled Resolving mid- and Long-Term Risks of National Debt.

China has an aging population of 100 million

In the past decade, China has allocated more than RMB 1 trillion (USD 157 billion) of fiscal subsidies to facilitate retirement payments.  But being the only country in the world that has 134 million people aged above 60, the huge hole of pension insurance is hard to fill.  The situation will be deteriorated by a increasing aging population—one of the legacies of one-child policy, and improved medical care that prolongs lifespan.  It says in the report that by the year of 2050, there will be one retiree in every three Chinese people.  It means each employee has to support 1.5 retirees. By that time, the hole in pension funding will snowball into an amount equivalent to 5.5% of its GDP.

The report warns that only by delaying retirement age and increasing state funding will not solve the problem. “China has a very imbalanced pension system”, said Chen Wenhui, vice chairman of the China Insurance Regulatory Commission at the Lujiazui Forum earlier this year. “An overall reform of the pension system is required”. Currently China’s pension funds are managed at local level by put ting aside workers’ salaries (6% to 11% to monthly salary) and government fund.  It is hard to retain the values of the holding, not to mention generating high yields. What is more, currently in China, only 170 million urban workers are covered by the pension scheme, that is about 15% of the entire population. Extending the coverage is also a key issue.

 A new pension scheme that attempts to boost yields by investing in foreign private-equity funds has been approved by The Ministry of Finance, MLSS, and the People’s Bank of China in May.

Related articles
Advertisements

About Chloe

you may say I'm a dreamer, but I'm not the only one! http://rvampie.wordpress.com

Discussion

5 thoughts on “China Faces Pension Crisis

  1. very informative and scary at the same time!

    Like

    Posted by snailfish888 | July 16, 2012, 8:30 pm
  2. Reblogged this on OyiaBrown.

    Like

    Posted by OyiaBrown | July 16, 2012, 9:58 pm

Trackbacks/Pingbacks

  1. Pingback: July 16 2012 China Daily Mail Headlines « Craig Hill - July 17, 2012

  2. Pingback: China Strives for Full Coverage of Medical Insurance « China Daily Mail - July 23, 2012

  3. Pingback: China completes its pension system 8 years ahead of schedule « China Daily Mail - October 15, 2012

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Advertisements

Get An Australian Diploma

China Daily Mail

China Daily Mail is not affiliated in any way with The China Daily or the government of the People's Republic of China.

Enter your email address to receive an email each time an article is published, or join our RSS feed. 100% FREE.

Want to write for China Daily Mail?

Read "Contributor Guidelines" above to join our team of 68 contributors. Write news or opinion about issues in China, or post photos and video. Promote your own site.

Recent Posts

China Daily Mail Stories Have Been Featured In:

Advertisements
%d bloggers like this: