Major Issues With Chinese Pension System Exposed: Retirement System Failure
Since the so-called Family Planning Policy, which allows only
one-child, has been carried out, Chinese society quickly aged.
By the end of 2004, 7.6 percent of China’s total population
is age 65 and over.
By the end of 2011 China had 185 million people
age 60 and over.
It is forecast that in 2030, China will have 350 million
elderly people age 60 and over.
So how should China’s pension problem be solved?
Let’s see what the experts and the people are saying.
For thousands of years before 1949, family support
of elderly people in China existed.
Beginning in the 1980s, the Chinese Communist Party (CCP)
implemented the so-called family planning policy
which only permitted one child per family, resulting
in elderly-care issues.
In the 21st century the sole child has to take on
the responsibility of supporting both parents.
Former Yunnan entrepreneur Zhu Chengzhi:
“The difficulty should be quite serious.
In rural or urban areas, elderly people are without
retirement income or a pension.
In addition, elderly people are inevitably frail and weak
with a lot of illness, but currently hospitals are places
for robbing money rather than healing the wounded
and rescuing the dying.
So can you imagine, the young couple has to bear
the burden of supporting both their parents and child,
incorporating hospital expenses for their elderly parents.
How can they bear it?"
The alternative method for the traditional family-support
of elderly is the social security fund support model.
Last week, the CCP Audit Bureau published the 2013
annual report exposing the loss of seven billion RMB
over the past few years of the self-indexation portfolio
managed by the National Social Security Fund (NSSF).
Currently in China, the pension and health insurance
of officials and civil servants are paid by the governments.
But other citizens have to pay monthly social security funds
by a certain proportion of wage income, the so-called
six social security payments (funds).
All these funds are generally managed
by the local governments.
Many people are very unhappy with the CCP’s
black-box management by the NSSF.
From previous years experience, once the deficit occurs,
the fund-payers must assume the loss by themselves.
Protests and complaints have all gone in vain.
Beijing Normal University MBA tutor Mr Duan Shaoyi:
“There is no way to recover the loss.
On the one hand, the pension funds have been diverted
to other fields by powerful government officials.
On another hand, there is no dedicated investment agency
to appreciate these pensions.
If they are well managed, then these funds are able
to generate more money.
However, these funds currently failed
to appreciate and even depreciated."
In addition to the NSSF, Mainland Authorities have launched
a number of pension models in recent years.
Most of them have been opposed by the people.
Supporting the elderly via their own house means the elderly
have full property rights for mortgaged through insurance
company, and in accordance with the agreed conditions
pensioners regularly receive pension until death.
But after their death, insurance companies will control
the right to dispose of property rather than the next of kin.
Thus, the common response from the people includes
working through lifetime and nobody responsible
for the pensions are considerably unreasonable;
Furthermore the owned houses which were bought
by lifetime saving will be also finally taken away,
and hence the government is really
“eating people without spitting out the bones!"
Retirement centers have been built in many cities
and towns in China in recent years.
But the general public cannot afford the large expense.
Zhu Chengzhi: “In general, the charges in retirement centers
are relatively high and unaffordable.
For example, my mother is almost 100 years old.
In March of this year, when I went to Chengdu to pick up
Tan Zuoren, I had to send my mother to a nursing home.
Despite it having been only 10 days, I still have
relatively deep feelings on this matter."
Before 1949, the CCP government vigorously promoted
the “paradise on earth" theory with so-called communism,
including the sayings “great wealth of products,"
“pension security for the elders" and others.
In fact, the existing historical stages which old people have
experienced are completely opposite to communist theory.
During the Great Famine of the 1960s, the first groups
of people who starved to death were the elderly and children.
Now after 30 years of implementing reform and opening up,
the so-called “pension security for elders"
has become one of the biggest concerns of the society.
Duan Shaoyi: “If governments are responsible for pensions,
there first needs to be enough financial ability,
plus they have to have the motivation.
But currently, two such aspects are both inadequate.
We cannot completely say they have no financial ability.
This country has money, but where did the money go?
Secondly, China is not a democratically elected government.
There are no benefits to the officials in managing well
and solving this matter so they have no motivation
to deliver well on the task."
It is predicted that by 2030, the entire Chinese population
will reach about 1.5 billion with 350 million age 60 and over,
which accounts for one fourth of the total population.
How should China’s pension problem be solved?
NTD commentator Zhao Pei said such good anti-corruption
and reform terms cannot offer pensions for the elderly.
Neither is it fair.
They actually just re-distribute the interests
among the different components of the CCP.
If fair treatment is desired, the CCP must step down.
Interview & Edit/Tangyin Post-Production/ZongYuan