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Pension problem shadows nation
2000-04-08
China Daily
China will likely confront a huge shortfall in pension funds that could undermine its pension system when its elderly population is expected to peak in 30 years.
That was the grim message heard at an international seminar in Beijing yesterday.
China's population is graying. Those 60 years old or older are expected to account for 22 per cent of the nation's population in 2030, the World Bank has predicted. China's elderly now account for 10 per cent of the country's population.
This trend means government would have to pay a sum equal to as much as 40 per cent of the State's total payroll to pensioners, seminar participants said.
"It is an unbearable burden on enterprises and will endanger pension payments," said Song Xiaowu, director of the Microeconomic Department of the State Council Office for Restructuring Economic System.
But China's current pension system, established in 1997 in a bid to stave off a pension fund crisis, is itself jeopardized by huge amounts of "implicit pension debts" stemming from the old pension system, Song said.
According to a report released yesterday by Song's office, the government needs at least 1.8 trillion yuan (US$217 billion), to keep its promise to pay pensioners under the current pension system.
China set up a new pension system three years ago that established individual pension accounts for workers in State enterprises.
But that did not provide for retirees or workers hired before 1997 who expect equal treatment, analysts who worked on report said.
Transitional measures, which required enterprises to absorb the implicit pension debt owed by government, put the new system "in a serious crisis," the analysts said.
A huge pension deficit has already resulted in siphoning as much as 100 billion yuan (US$12 billion) from individual pension accounts to balance the pension system's budget in 1999, statistics from the Ministry of Labour and Social Security indicated.
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