China’s Pension Gap Is Growing as Aging Becomes Economic Risk
It’s no secret that China is an aging society facing a growing pensions bill. Just how much of that bill is unfunded seems to be one though.
It’s an increasingly urgent question, as nearly a third of the inhabitants of the world’s most populous country will be over 60 years old by 2050, according to United Nations data. By 2015, the pension of each retired resident was borne by the contributions of fewer than three wage-earners, government estimates show.
When China set up the current pension system in early 1990s, a shortfall immediately emerged, as the government began making payments to the already-retired using the current contributions of the working population, without there being any cash pile from the previous generation.
The problem was exacerbated in the late 1990s, when millions of workers at state-owned enterprises were laid off and were offered pensions even though they haven’t reached retirement age.
Full Content: Bloomberg
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