Pressure on Nation’s Pension System
2 min readHeavy Burden
The huge aging population brings various social and economical problems to China，which is stll a developing country.The elderly will be a big burden for China through the year 2050，when that population will reach 400 million，accounting for 25 percent of the total.There are some 10 million people above the age of 70 across the nation，most of whom are supported by their children.In a survey of China’s urban areas by the China Sci&Tech Center for Senior Citizens，98 percent of the elderly interviewed were found to live alone，and less than 2 percent to be cared for by welfare institutions.The current situation is，therefore，far from satisfactory.The welfare infrastructure for the aged is lamentably inadequate，and the capacity of the entire social welfare institution covers only 1 percent of China’s aging population.
Pressure on Nation’s Pension System
With a growing share of the country’s massive population turning gray，the fragmented pension system faces unprecedented challenges.
What’s particularly worrisome is that China is getting old before it getsrelatively rich.The nation’s current per capita GDP barely exceeds US $1，000，compared with levels of between $5，000 and more than $70，000 in developed countries at the time of their societal aging.This lack of societalwealth has severely squeezed China’s ability to care for its expanding senior population.
The problem is directly manifested in the inadequacy of the nation’s pension system.Only 13.4percent of the total population-some 174 million people-was covered by the system as of 2005，far below the minimum-level of 20 percent prescribed by the International Labor Organization.Nearly all rural residents and rural migrant laborers，some 800 million in total，are left out of the net.
For those who do get covered by the pension system，there is considerable uncertainty as to whether they will receive suficient retirement payments promised by the plan.The national pension scheme，introduced in 1997 during China’s drastic restructuring of state-owned enterprises，first had to account for the legacy benefits for millions of laid-off workers who used to enjoy cradle-to grave state welfare.It must now also cover the accrued obligations for millions of newcomers to the workforce who are required to contribute a certain percentage of their monthly salaries to individual pension accounts.
