10/04/2010, 00.00
CHINA
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Pension reform begins in Shanghai

China is forced to raise pension age by five years because of scandals, corruption and one-child policy. A pilot project is launched first in the country’s largest city and will gradually be applied to the rest of the country.

Shanghai (AsiaNews) – The Chinese government has decided to adopt a risky pension plan that would allow workers to work for five more years before they retire. It is doing so in order to cope with a fast aging population as well as a wave of scandals involving local officials, who have embezzled the pension funds of the cities they administer.

Shanghai will begin testing a flexible retirement system on 9 October. According to state media, eligible employees in the private sector will be allowed to postpone retirement until 65 for men and 60 for women. Public servants will continue however to retire under the present system. The current retirement age in China is 60 for men and 55 for women.

“The system tries to meet all the needs of the residents. Those who want to retire on schedule can do so, while those who wish to continue working may also do so," says Bao Danru, deputy director of the Shanghai Bureau of Social Security.

Local media have reported that the decision to change the system is also due to shortfalls in the pensions schemes.

Zheng Bingwen, from the Chinese Academy of Social Sciences, explained that China's pension deficit has recently topped 1.3 trillion yuan (0 billion) and that it is bound to grow further in the future.

Others note that postponing the age of retirement will not cut the deficit, only delay its impact. It will however leave fewer job opportunities for younger workers.

The problem is the result of China’s infamous ‘one-child policy’, which the authorities recently reiterated for at least another “20 years”.

By imposing coercive population controls, the government has forced everyone to work longer since fewer children means fewer contributions to pension plans. The current system is thus starting to collapse from weak foundations.

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