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September 23, 2013

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Home » Opinion » Chinese Views

House-for-pension proposal prompts concerns

Source: Xinhua | September 23, 2013, Monday | Print Edition

In an effort to explore elder care solutions for China’s rapidly aging society, the State Council, China’s Cabinet, last week pledged to complete a social care network for people over age 60 by 2020. In that year, people over 60 are expected to number 243 million. The population of seniors was 194 million at the end of 2012, the largest senior population in the world.

One proposed approach is the house-for-pension program. It would not be a pillar of elder care and it’s not for everyone, but it could help in many cases.

“The plan allows you to sign the deed of their house over to an insurance company or bank, which will appraise the house and your life expectancy, and then pay you a certain amount every month,” said Meng Xiaosu, former CEO of Happy Life Insurance Co Ltd.

“You can still live in your house, but the company or the bank has ownership,” he said.

The program, while only a suggestion, has been met with widespread concern and mixed reviews.

The idea is not new in China. Several cities, including Beijing, Shanghai and Nanjing in Jiangsu Province, tested the program since 2003, but all fared badly due to various laws and situations unique to china.

One big barrier is China’s 70-year leasehold for real estate. According to China’s Real Property Rights Law, private property can be leased for only 70 years. Though related laws also stipulate that the leasehold can be automatically extended, the cost of lease extension is not specified.

Many challenges

Volatility of the property market makes financial institutions’ hesitate to undertake the program, since they worry that a possible plummeting in housing prices would wipe out their profits.

The idea also challenges traditional Chinese beliefs that parents rely on their children to care for them and leave their property, especially their houses, to their children as inheritance.

In a community in Hefei City, 90-year-old man surnamed Shen plays chess with friends, sings, and is in good health. He said his children are financially well-off and don’t depend on his property, but he is not willing to trade his house for a monthly pension.

“Elder care facilities and services are still largely inadequate in China. Even if my income rises after I deed my house, there’s no guarantee I can receive good-quality care services,” Shen said.

Du Hui, owner of a private business in Nanjing, said the future of the program is uncertain and many situations are hard to predict because there are no specific rules guaranteeing the program’s soundness.

Du said he would prefer that his parents sold their urban home and buy one in a quiet, neighboring county. They could use surplus finds to buy financial products generating income.

It’s different for Li Yuzhen. “The only thing I can leave to my son is the house. If I deed my house, I could possibly live a good life, but what about my son? With property prices so high, buying another house is absolutely impossible for him,” Li said.

Analysts have proposed that the house-for-pension program mainly serve the childless and elders with deceased children. Du Peng, director of the Gerontology Research Center of Renmin University of China, suggested the program should only be alternative to facilitate elderly care - not a pillar to support the elder care system.

Government duty

“What the government should do is to reassure the public of a decent life for seniors, with a more sound and sustainable elder-care mechanism and more advanced infrastructure,” said Du Peng.

Ma Li, a counselor of the State Council, said that the country should build an elder care mechanism based on home care and supplemented by assisted living in communities. Meanwhile, facilities and services should be greatly enhanced and more efforts are needed to expand the workforce in the sector.

“As for the house-for-pension proposal, it is only a complementary solution. In cities such as Beijing and Shanghai, the elderly can receive a handsome sum of money through it, but in villages, the elderly get very little because their houses are of limited value,” Ma said.

 

Chinese Views


 

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