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Worse than a bad pension is being alone in old age
By Wan Lixin |
March 2, 2013, Saturday
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Print Edition
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A recent report by the Chinese Academy of Social Sciences suggests that nearly 40 percent of the people surveyed find their pension too low, sometimes being inadequate to meet their daily needs.
Pensions also vary greatly, with some people earning as much as 10,000 yuan (US$1,587) a month, and some as little as 200 yuan.
And the prospects for improvement in the pension system are grim, since the pension deficit amounted to 2 trillion yuan in 2011. Some experts believe that unless desperate remedies are adopted, the system will break down before too long.
One of the many challenges is to fully fund individual pension accounts, and make the current system more fair.
As it stands now, some privileged civil servants and employees of state organizations and institutions need never contribute to their individual accounts, though they can enjoy pensions that average 80 percent of their preretirement income.
By contrast, corporate employees need to pay at least 6 percent of their wages towards their pension account, while their future pension is only about 40 percent their preretirement wages.
During a recent opinion pool among 700,000 netizens asked, "What are the 10 most pressing social issues on your mind?" the elimination of the two-track pension system tops the list.
But any effort to scrap this deeply unfair double-track pension system is sure to meet with strong resistance, notably among policy makers who, being civil servants themselves, are among those with vested interests in the system.
Retirement under siege
According to "When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them" by Teresa Ghilarducci (Princeton University Press, 2008), how to work out a viable pension system is not an issue restricted to China.
The author says that the elderly used to be able to retire with dignity, but now retirement is under siege in the US.
American companies used to offer traditional "defined benefit" pension plans. Now, most offer "defined contribution" pension plans, which are cheaper for the company but less effective in terms of guaranteeing a secure retirement.
Forecasters say that one out of five US retirees may live in poverty in the future.
Elderly people without pensions find themselves trying to squeeze by on Social Security as they work part time for minimum wage serving hamburgers or greeting customers at discount stores.
Some have money saved, but the overall US savings rate is far too low.
For most workers, reliable pensions are becoming a thing of the past, just as costs are rising.
"Older people are working more hours, postponing retirement and going back to work after being retired, mainly because of the collapse of the pension system," writes Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at The New School for Social Research, and a pension expert.
Her answer for the beleaguered Social Security system is a bold, new government program offering "Guaranteed Retirement Accounts" (GRAs), which would be administered by an agency of the government. GRAs, she said, would guarantee retirees a minimum 3 percent rate of return, adjusted for inflation.
I think old age care can be argued from a purely economical perspective, but it can be counterproductive to restrict the discussion to economics, or money.
Beyond a certain amount, the value of money diminishes, especially for the elderly.
Let's compare the circumstances of some elderly people.
One uncle of mine and his wife in rural northern Jiangsu Province, both in their 70s, are still active in the farm work, and play a role in the affairs of the extended family, and in daily contacts with their grandchildren. A couple of years ago they observed with satisfaction to me that as seniors they were each entitled to a monthly pension of 60 yuan, not much, but more than enough to cover their daily needs.
Aging with dignity
Another slightly older couple in suburban Shanghai have a combined pension of over 5,000 yuan, and live on their own. They know their neighbors, and are occasionally visited by their children and grandchildren. Their chief pastime is to sun themselves in a courtyard or play mahjong at a community center.
Years ago an elderly British volunteer teacher told me of Western pensioners who spent days traveling on luxury cruises, waking up in another port, checking their itinerary and murmuring, "Oh, this must be Monday."
I am also tempted to cite an article by Andrew Lam in Monday's Shanghai Daily ("Aging alone in a foreign land: An old Vietnamese woman speaks.")
"I remember a few old women sitting in their wheelchairs waiting for their children or family, day in and day out, and no one came," he wrote.
"There was even one who outlived her children and still, everyday, she expected her sons to walk in through the door. How tragic to live so long and to be so alone!"
Pensions also vary greatly, with some people earning as much as 10,000 yuan (US$1,587) a month, and some as little as 200 yuan.
And the prospects for improvement in the pension system are grim, since the pension deficit amounted to 2 trillion yuan in 2011. Some experts believe that unless desperate remedies are adopted, the system will break down before too long.
One of the many challenges is to fully fund individual pension accounts, and make the current system more fair.
As it stands now, some privileged civil servants and employees of state organizations and institutions need never contribute to their individual accounts, though they can enjoy pensions that average 80 percent of their preretirement income.
By contrast, corporate employees need to pay at least 6 percent of their wages towards their pension account, while their future pension is only about 40 percent their preretirement wages.
During a recent opinion pool among 700,000 netizens asked, "What are the 10 most pressing social issues on your mind?" the elimination of the two-track pension system tops the list.
But any effort to scrap this deeply unfair double-track pension system is sure to meet with strong resistance, notably among policy makers who, being civil servants themselves, are among those with vested interests in the system.
Retirement under siege
According to "When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them" by Teresa Ghilarducci (Princeton University Press, 2008), how to work out a viable pension system is not an issue restricted to China.
The author says that the elderly used to be able to retire with dignity, but now retirement is under siege in the US.
American companies used to offer traditional "defined benefit" pension plans. Now, most offer "defined contribution" pension plans, which are cheaper for the company but less effective in terms of guaranteeing a secure retirement.
Forecasters say that one out of five US retirees may live in poverty in the future.
Elderly people without pensions find themselves trying to squeeze by on Social Security as they work part time for minimum wage serving hamburgers or greeting customers at discount stores.
Some have money saved, but the overall US savings rate is far too low.
For most workers, reliable pensions are becoming a thing of the past, just as costs are rising.
"Older people are working more hours, postponing retirement and going back to work after being retired, mainly because of the collapse of the pension system," writes Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at The New School for Social Research, and a pension expert.
Her answer for the beleaguered Social Security system is a bold, new government program offering "Guaranteed Retirement Accounts" (GRAs), which would be administered by an agency of the government. GRAs, she said, would guarantee retirees a minimum 3 percent rate of return, adjusted for inflation.
I think old age care can be argued from a purely economical perspective, but it can be counterproductive to restrict the discussion to economics, or money.
Beyond a certain amount, the value of money diminishes, especially for the elderly.
Let's compare the circumstances of some elderly people.
One uncle of mine and his wife in rural northern Jiangsu Province, both in their 70s, are still active in the farm work, and play a role in the affairs of the extended family, and in daily contacts with their grandchildren. A couple of years ago they observed with satisfaction to me that as seniors they were each entitled to a monthly pension of 60 yuan, not much, but more than enough to cover their daily needs.
Aging with dignity
Another slightly older couple in suburban Shanghai have a combined pension of over 5,000 yuan, and live on their own. They know their neighbors, and are occasionally visited by their children and grandchildren. Their chief pastime is to sun themselves in a courtyard or play mahjong at a community center.
Years ago an elderly British volunteer teacher told me of Western pensioners who spent days traveling on luxury cruises, waking up in another port, checking their itinerary and murmuring, "Oh, this must be Monday."
I am also tempted to cite an article by Andrew Lam in Monday's Shanghai Daily ("Aging alone in a foreign land: An old Vietnamese woman speaks.")
"I remember a few old women sitting in their wheelchairs waiting for their children or family, day in and day out, and no one came," he wrote.
"There was even one who outlived her children and still, everyday, she expected her sons to walk in through the door. How tragic to live so long and to be so alone!"
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