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Aging population puts pressure on pension funds as experts debate future reforms
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Across East Asia, demographic trends are straining social welfare resources and the capabilities of officials to provide for aging populations. China is no exception to this trend. Indeed, a vigorous debate is now playing out among experts over how the country can best support a rapidly swelling population of senior citizens.
This issue was the focus of a recent roundtable discussion during the Shanghai Forum, an event held at Fudan University where scholars, politicians and opinion leaders gathered to proffer their views on improving world governance.
The need to reform China’s pension system received the most attention from panelists as demographic woes make it increasingly difficult for officials to provide entitlements to an ever growing number of retirees.
China’s current pension system was meant to address socioeconomic conditions which existed during the 1980s, when the needs of an aging population were a secondary concern, said professor He Wenjiong of Zhejiang University.
Since the pension fund relies on contributions from workers, any proposals to issue larger sums to retirees will likely prove unsustainable, explained He. Right now, he said, the work force is already struggling to support China’s graying population, and more generous pension payouts will create an even heavier burden on businesses and employees.
According to the professor, the right way to overhaul the system is to guarantee basic coverage rather than increasing superannuation payments. At the same time, the age of retirement eligibility should be postponed to mirror lengthening life expectancies, he added.
Aside from looming pension shortfalls, there is also increasing room for authorities across East Asia to improve the quality of senior care.
Brian Carpenter, professor of psychology with Washington University in St. Louis, noted that elder care across the region remains very much a family matter thanks to cultural notions about the importance of filial piety.
Indeed, as some governments constrain their entitlement programs and other supports for older adults, family members may see their contributions becoming even more important, Carpenter told the forum.
However, a major problem with family support is a lack of communication with older adults under the care of their family members. Carpenter cited research indicating that family members are not particularly knowledgeable about older adults’ preferences across a range of domains, including their wishes regarding social contact, leisure activities, living environment and access to health care.
According to him, family members across all generations are reluctant to bring up issues that they fear are depressing, morbid and intrusive, even if they sense some urgency to talk about such topics. Ineffectual communication can lead to ill-considered decisions made by “proxies” — adult children — in many cases on behalf of aging adults, Carpenter observed.
In his speech, Hu Zhan, deputy professor of sociology at Fudan University, said that although many expect the government to offer more assistance to retirees, family members remain the most important providers of senior care. And this is as much a reality in China as elsewhere in the world.
In China, older adults are often willing to live with, or be close to, their children. Not everyone gets to live this life though, as there are so-called “empty-nesters” in China left behind by children who have left for cities. But their proportion among the overall population is small relative to many other countries, said Hu.
While financial support from offspring can somewhat compensate for the inadequacy of pension payouts, this is not the case in Japan, a society where it is a tradition for pensioners to issue stipends to their children, even if the latter are employed, said Naohiro Ogawa, professor of economics of Nihon University in Japan.
After comparing circumstances in China, South Korea and Japan, Ogawa argued that unlike China, where people save up heavily for rainy days in old age, senior citizens in Japan and South Korea often need to shell out money from their own savings and pension packages to provide for dependents. Therefore, their living costs are ever-higher.
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