China Warehouse- More Than Crockery Message Board

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Strategies & Market Trends : China Warehouse- More Than Crockery

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To: RealMuLan who wrote (3095)	4/20/2004 5:54:02 PM
From: RealMuLan	Read Replies (1) of 6370

China faces pension crisis unless it acts, says report April 20, 2004 Beijing - Glaring shortcomings in China's basic pension system could leave tens of millions of people destitute in old age and provoke a crisis unless the government rethought its reforms, a US think-tank said yesterday. The Centre for Strategic and International Studies said payroll contribution rates as high as 24 percent and poor coverage were among the problems China faced as it grappled with surging numbers of elderly and declining fertility rates. China needed to make its pension system more affordable by assuming the cost of pension liabilities resulting from the closure of ailing state firms as the country pursued economic reforms in recent years. It also needed to create a universal floor of old age poverty protection alongside a system in which pension contributions were personally owned and independently managed under government supervision, the centre said in a report. Richard Jackson, the author of the report, said: "Unless China takes adequate measures it could face a crisis of immense proportions later this century." In 1997 China replaced its pension system, which was designed to serve a state-planned economy, with a two-tiered system consisting of reduced pay-as-you-go benefits and personal retirement accounts. It extended coverage of its basic pension system to private enterprise for the first time that year. But personal account contributions were typically "borrowed" by local governments to cover shortfalls in pooled contributions managed by social security bureaus, the report said. It recommended that China ensure personal accounts were genuinely funded by transferring management gradually from the social security bureaus to independent asset managers. businessreport.co.za

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