China will “fully guarantee” future pension payments, a government official told reporters, amid warnings from government researchers that funds could run out by 2035. China’s social security system is under increasing strain as a result of a rapidly ageing population and a shrinking workforce.
The China Academy of Social Sciences (CASS), a government think tank, said in a report this month that the country’s pension funds could become insolvent by 2035, with a rapidly dwindling workforce unable to support the growing number of elderly people. But Nie Mingjuan, head of the pension and insurance office at the Ministry of Human Resources and Social Security, told a news conference on Tuesday that China was now preparing “positive, comprehensive and scientific measures” to handle the challenge.
“The central government is paying close attention.. and is fully able to guarantee over the long term that pension funds will be paid on time and in full,” Nie said.
China’s dwindling workforce is expected to become one of the country’s biggest challenges in the next few decades, and the issue was a major preoccupation at the latest national session of parliament in March. The country is also taking action to try to encourage couples to have more children, relaxing a strictly enforced “one-child policy” in place for 40 years. Birth rates fell for the second consecutive year in 2018.
Nie noted that changing demographics were a “major concern” and had already put the system under great strain, with those over 60 years of age now accounting for 17.9 percent of the total population. He said by the end of last year, each elderly person was supported by an average of 2.66 people, down from around 5 people 20 years ago. A fall in this “dependency ratio” means fewer people are paying into pension funds, he said.
According to the CASS report, China’s pension fund is already dependent on government subsidies, and it is expected to start running an annual deficit by 2028. On current trends, each pensioner will be supported by only one worker by 2050, it said.