China’s growing pension gap has left many of the country’s middle-aged and elderly worried about their retirement in recent years. According to a report released today by the China Insurance Association (CIA), China will experience a pension gap of 8 trillion to 10 trillion yuan in the next 5 to 10 years, and it will grow. According to the Central News Agency, many of China’s middle-aged and strongest people are worried that they will not receive their pensions, which they have been paying in advance every month and which have risen steadily over the past 15 years, when they grow old.
According to a report by the Central News Agency today, China’s pension gap is expected to rise to 10 trillion yuan in the near future. The report quotes the official Chinese news agency Breaking News as saying that the China Insurance Association today released a “Study Report on the Third Pillar of China’s Pensions” to make this assessment. According to the report, the aforementioned pension gap of 8 trillion to 10 trillion yuan “will further widen over time.
China’s widening pension gap has been of concern to the nation’s elderly and even middle-aged adults in recent years because of the country’s 40 years of family planning, which has led to a dramatic reduction in the base of its young and middle-aged population, resulting in a rapidly aging population that has led to fewer people paying into the pension system (social insurance) and more people receiving pensions. However, China has a well-documented record of 38 million people who have abandoned their social security contributions. As a result, the Chinese authorities have previously made increasing noises about raising the retirement age for pensions. Many of China’s middle-aged people are worried that they may not receive their pensions, which they have been contributing to upfront every month and have been getting higher every year for the past 15 years, when they grow old.
According to the report, China’s pension system is currently dominated by the first pillar of social security, the second pillar is partially covered by employers, and the third pillar is underdeveloped, according to Breaking News. Despite the rapid development of China’s capital market, the overall market depth is insufficient, and there is a lack of long-term, institution-led, self-sustaining retirement investment funds for the public. The report points out that, from international experience, pensions are a stable and long-term source of funding for global capital markets. However, the development of the third pillar of Chinese pensions is still in its infancy, with lower replacement rates and asset sizes than most mature capital markets.
According to the report, which is cited in the report, the Chinese government should promote the optimization of pension investment products and policies to make pensions an attractive asset, and consider granting the country special long-term asset allocation status.
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