Most Chinese people rely on personal savings to support them in old age, according to a survey organized by the Society Research Center of China Youth Daily and www.news.sina.com.cn. The survey interviewed 3,871 people, only 20.2 percent of whom thought they could even partially rely on government security programs.

Mounting pressure for rural elderly

“The negative effects of aging can be seen most clearly in rural areas,” said Tang Jun, Secretary-General of the Social Policy Research Center of the Chinese Academy of Social Sciences. Although the old-age insurance system is not perfect, the effects of aging in cities are limited because labor forces from rural areas will always be available; however, rural areas do not have the same influx of able-bodied workers.

“The second and the third generation of peasant workers are reluctant to go back to the countryside,” Tang explained. “The aging population will therefore be a big problem in rural areas within the next ten years.” The proportion of aged people amounts to 7.13 percent in rural areas, while in cities the figure is 6.69 percent, according to the 2000 population census.

China’s social security system does not cover the elderly living in the countryside, so the pressure on them is a growing concern. By the end of last year 1,905 counties in China had implemented an old-age insurance pilot project and the number of farmers enrolled in the insurance program reached 53.73 million; 3.55 million farmers were covered by the old-age pension, but each elderly person in the countryside may only receive 1,000 yuan (US$133) per year.

Older people’s homes see little profit

“Investment towards old-age support in China will not bring huge profits, at least not at the present time,” Tang Jun said while addressing a recent forum on aging issues.

Currently, the number of people aged above 60 is 140 million in China, which accounts for 11.03 percent of the total population. The problem this creates is, the greater the number of elderly people, the greater the need for old age support funds. “The older Chinese population is not strong in terms of consumption capacity. They dare not spend money.” Tang explained.

China lags behind developed countries in terms of the construction of older people’s homes and social welfare homes, and also falls short of the effort put forth by other developing countries such as Brazil. The reasons for the lack of old-age support homes can be found in the Chinese economy and culture. The cost of a nursing home with good conditions is between 2,000 and 3,000 yuan per month, not an affordable amount for a common household.

On top of this, it is a traditional Chinese practice that children will ensure their parents are looked after in old age. It is therefore considered a dereliction of duty for children to take their aged parents to nursing homes, said Xu Zongwei, Deputy Director of the Policy and Regulation Department of the Ministry of Construction.

Government should guarantee minimum income

“The social security system should include both a base income and a supplementary fund,” Tang Jun said. The base income should be more accessible and guaranteed by national finance to ensure a basic standard of living. The supplementary fund should be operated like a comprehensive individual account, meaning the funds could be lent out as mortgage loans for buying houses, vocational training, education for children, and even for medical expenses in special circumstances. This loan could then be paid back in installments based on the current interest rates.

Tang believes the elderly simply don’t have enough time to accumulate funds for their retirement funds. He suggested that pension funds be generally provided to all elderly people above 70 in rural areas. “If the elderly people have disposable income, they will be able to buy old-age support service products,” he said.

(China.org.cn by Yang Xi, September 25, 2007)