04/12/2019, 10.09
CHINA
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Chinese Academy of Social Sciences: Thanks to One Child Law, pension fund will be exhausted by 2035

The fund, which now has a reserve of 4800 billion yuan, will be reduced to zero. In 2050 only one active worker will have to support a pensioner. After decades of imposition on the One Child Law, the government now supports the birth rate, but without success.

Beijing (AsiaNews / Agencies) - By 2035 the state pension fund will be exhausted because of the reduced workforce da direct result of the one-child policy.

A report by the Center for Social Security in the World, a branch of the Chinese Academy of Social Sciences, warns that the pension fund of the city workers, one of the pillars of the Chinese state pension system, had a reserve of 4800 billion at the end of 2018 of yuan (about 633 billion euros). It is expected that in 2027 it will rise to its maximum point, at 7000 billion yuan (about 933 billion euros), but in 2035 it will be reduced to zero.

According to the Center, funded by the State, by 2050, the difference between contributors and those who benefit from it could create a shortfall of 11 thousand billion yuan (about 1450 billion yuan), since there would be only one worker per pensioner .

The report confirms what many Chinese demographers have been saying for a long time: that due to the restrictions on births, in the future the system of state pensions will be impractical.

In 2018, 249 million Chinese had reached 60 and were entitled to claim a pension, about 18% of the population.

In recent years the government has tried to encourage births, but without success.

China’s social security regulations require employers to pay up to 20 per cent of their employees’ salaries into the government pension fund, while employees are required to contribute 8 per cent of their wages. But while the contribution rates are mandatory, enforcement has been lax, with local governments allowing small businesses to pay less to ensure that they maintain high employment.. But this also happens with large industries. Last month, to revitalize the economy, the Council of State decreed to reduce the contributions of companies to 16%. But this is going to cut further revenue to the pension fund.

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