"The issue of supporting the aged already is, and will continue to be, a significant issue in China," said Xiang Huaicheng, chairman of the National Council of the Social Security Fund. He was speaking at an insurance forum held recently in Beijing.
"If this issue is not addressed well, it will remain a problem for at least the next 30 years in China," he added.
An aging society is defined as one where more than 10 percent of the total population is over the age of 60, and 7 percent over 65. It is estimated that by 2035 the country will have 400 million people aged 60 and over, accounting for 27.5 percent of the population. By then, China's seniors will represent a larger group of people than the combined total populations of England, France, Germany, Italy and Japan.
However China was a late starter in establishing a comprehensive social security system and the pension fund doesn't cover everyone. Xiang reveals that just 155 million people, or 12 percent of the total population, have participated in the system.
Official statistics show that the country collects some 270-280 billion yuan (about US$33-34 billion) in pension contributions each year, while the expenditure is also 270-280 billion yuan. So at first sight it would seem that the numbers balance, but in fact this is not the case.
In many of the old heavy industry bases including Shenyang of Liaoning Province in northeast China, there are more retired employees than currently employed staff and pension expenditure exceeds receipts. However Shenzhen has fewer retirees than workers and surplus pension funds. But under present arrangements the surplus in Shenzhen isn't available to fill the gap in Shenyang for China has still to conduct an overall audit.
"Even the social security fund that has been set up, is still inadequate," said Xiang Huaicheng.
If the capital in the fund was to reach 2,000 billion yuan (about US$241 billion), assuming say a 5 percent return, this could generate 100 billion yuan (US$12 billion) a year. This could provide a pension for about 400 million people. But current payments into the fund each year are only about 100 billion yuan (US$12 billion) while expenditure is running around 270 million yuan (US$33 million). The revenue shortfall is being made up from state funds as was written into the documentation a year ago. The capital that would be needed to meet the increasing demands of the next three decades is not being built up. China has explored many options but not yet resolved the problem and a decisive move is still awaited.
"The issue has been held up for too long," Xiang commented.
(China.org.cn by Guo Xiaohong July 8, 2004)
