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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4594)	3/28/2005 1:42:35 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China plans to use state assets to fill gaping hole in pensions BEIJING : China plans to use money tied up in state-owned assets to deal with a boom in retirees expected in 15 years' time, state media reported Monday. State assets, such as stock in large companies, will be converted into funds that can help fill China's 2.5-trillion-yuan (US$300 billion) pension shortfall, the China Daily said. "If there is no sound pension system, a crisis is likely to occur when the retiring peak comes," said Cai Zhenhong, a senior official at the Ministry of Labour and Social Security. In the past, the number of retirees was so small that the state could easily look after them but this is no longer possible. While a steep rise in the number of elderly is seen in all countries that experience rapid development and rising standards of living, in China it is taking place on an unprecedented scale. It is estimated that the number of retired people in cities will more than double to reach 100 million by 2020, according to the newspaper. To avoid a major financial crisis, China is trying to abandon its previous "pay-as-you-go" system, where people in the workforce pay directly for the support of retirees in the expectations that later generations will do the same for them. Instead, the government aims to establish a new system where each individual saves money for himself on a personal retirement account. The problem is that currently the money placed on these retirement accounts is not being saved but is diverted directly for use by current retirees, or a "pay-as-you-go" system in all but name. "We should gradually save enough in personal pension accounts and stop diversion," Cai said in the report. One suggestion made by the policy community in Beijing is for the retirement age to be raised from the present 55 for women and 60 for men to, say, 65 for both sexes by 2030. "It will cushion pension pressure in China," said Tao Liqun, an analyst with the Beijing-based China Research Centre for Aging Science. At the same time, a solution like that could create new problems since it would exacerbate the jobless situation, which is already dire, the newspaper said. - CNA channelnewsasia.com