As part of the effort to complete a social care network for people over age 60 by 2020, a house-for-pension swap program has been proposed recently (“House-for-pension proposal prompts concerns,” September 23, Shanghai Daily).

It is said that “the plan allows you to sign the deed of your 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.”

In another triumph of market forces, the residual years of life — increasingly associated with frailty and inactivity — is linked to cutting edge finance.

It does not surprise me the proposal has met with widespread concerns.

A survey by the China Youth Daily (September 24) found that nearly 90 percent of those surveyed believe this plan will not work.

During an interview with the paper, Li Haining, who works for a research institute in Beijing, said he worried that relevant authorities would not have had hit upon this remedy if they have not met with difficulties in funding the current pension scheme.

There have since been official assurances about the health of the current scheme, and experts weigh in by, of course, citing “prevailing international practice” from developed Western countries.

A commentary titled “Why does the seemingly beautiful ‘house-for-pension’ plan provoke suspicions?” (September 23, Xinmin Evening News) observes that this proposal represents a conflict with traditional Chinese values, and is cruel in view of the economic realities.

Someone aptly sums up the proposed plan: “During the first half of your life, you save money to buy a house, while during the latter half of your life, you sell it for old-age care.”

That is, if they could afford a house with their life’s earnings. Even in a small city a flat can be worth a million yuan (US$164,000).

Double-track pension system

The commentary in the Xinmin Evenings News concludes that any pension proposal would not go far without touching the “double-track” pension system — a system that provides generously for civil servants, while steadily giving short shrift to their supposed masters, the ordinary people.

Is “international practice” really so beautiful as some experts claim?

In “What Color Is Your Parachute? For Retirement — Planning Now for the Life You Want,” authors Richard N. Bolles and John E. Nelson examine the grim reality confronting “the baby boomer generation” that is reshaping retirement radically in the United States.

The book claims that historically, retirement income has been based on savings, pensions and, in the US, Social Security payments. Now major problems affect all these bulwarks.

In the past, workers could count on generous pensions from the companies where they spent their adult lives. The pensions were supplemented with personal savings, along with Social Security payments that kicked in much earlier than they do today.

In today’s harsh, dog-eat-dog world of corporate downsizing (a euphemism for firing), pensions seem almost archaic.

Americans’ overall savings rate is an embarrassingly negative figure and Social Security is going broke.

Obviously, this cruel mechanism and the insensitivity to the plight of the elderly is very helpful to growth and efficiency.

Some Chinese policy-makers and experts have been quite “courageous”  in introducing market incentives to reform the old pension system. These reformers can flirt with reforms in the security of consolidated perks and privileges for themselves.

Many civil servants will have decent pensions upon retirement.

By comparison, an average worker outside the civil service system may have much bleaker pension prospects.

This is aggravated by the demographic shifts, in that after years of aggressive population control, we are demographically in an inverted pyramid, where a small base of the working population have to support a much bigger superstructure of pensioners.

According to analysts, this is much more serious than the plight confronting the baby boomer generation in the US.

The boomers are getting ready to retire, while the generations that trail it do not include enough workers to cover all the benefits promised to baby boomers.

According to Bolles and Nelson, this will result in significant cuts in the benefits in 2040 and thereafter. If this step is not taken, the system eventually will go broke. “For social Security, the challenge is... the funding crisis of fewer and fewer workers paying in for more and more retirees,” the book observes.

Addressing a similar concern, it is reported that Shanghai, subject to approval, is seeking to amend its family planning policy (September 24, Shanghai Daily), citing, among other factors, the graying of the population.

But as the book suggests, a satisfying retirement depends on more than money.

If anything, the reduction of retirement to money is exactly the result of market fundamentalist tendencies, simplistic and misleading.

Although going into an expensive institution for the elderly can cost a fortune today, few would covet such institutionalization. As a recent survey from Shanghai Statistics Bureau suggests, nearly 70 percent of elderly people in the city prefer their children to take care of them at home (“Elderly prefer to be cared for at home,” September 23, Shanghai Daily).

Yes, here many of our experts find it hard to resist the temptation of citing evidence of “advanced international practice”, but suffice it to note that in an essential stage of human life, the elderly also need respect and attention, probably more than at any other stages of life.

Spiritual need of the elderly

This need used to be addressed admirably well in traditional Chinese families, where age automatically commanded respect.

We need to be proud that 70 percent of our elderly still dare to express their preference to stay at home in their old age. Focusing on the money problem should not distract us from the bigger issue of administering to the spiritual needs of the elderly.

Many times I have observed a long daily queue of the elderly before the opening of a qipai shi (chess and cards room, a euphemism for mahjong house) in a neighborhood in suburban Shanghai.

Are they happy?

They are probably happier than those who spend old age visiting one port after another aboard a luxury cruiser, waking up one morning, checking the itinerary, murmuring, “Oh, it must be Monday.”

True happiness depends on automatic provision for the young as well as the old, as in traditional Chinese society. That provision can only be effected in the comfort of home.

As Lin Yutang explained, the tenderness toward old age in China is “a feeling that I can compare only to the Western chivalry and feeling of tenderness toward women.”

While tenderness toward women is part of an instinctual impulse, the care for the elderly is sign of a culture informed by a deep sense of humanism.

As Lin observed, “It is to be assumed that if man were to live this life like a poem, he would be able to look upon the sunset of his life as his happiest period, and instead of trying to postpone the much feared old age, be able actually to look forward to it, and gradually build up to it as the best and happiest period of his existence.”

When you know that a house provides physically for a home, and a home is a continuation of the family clan, you know where the “house-for-pension” plan goes wrong.