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UPDATED: January 3, 2015 NO. 1 JANUARY 2, 2014
Caring for the Elderly
China faces an urgent need to reform its pension system and improve eldercare to deal with a rapidly aging population
By Tang Yuankai
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FUN TIME: A group of senior citizens in Shandong Province rehearse at a local entertainment center for the elderly on November 5 (DONG NAIDE)

One of the reform tasks listed by a decision adopted at the Third Plenary Session of the 18th CPC Central Committee is to achieve the national pooling of basic pension programs, which is regarded by experts as a measure for building an equitable society. The Social Insurance Law, effective from July 1, 2011, states that national pooling of basic pension funds will be gradually realized. China's 12th Five-Year Plan (2011-15) also mandates achieving the national pooling of basic pension funds.

Professor Zheng Gongcheng said that efforts to achieve such a goal are primarily held back by the inaction of better-off localities, which are concerned with the possible redistribution effects of national pooling, and hence have little motivation to promote it.

"Realizing this goal has a bearing on overall reform of the pension system," Zheng Gongcheng said. He believes that the national pooling of basic pension funds for urban enterprise employees could create a favorable environment for reforms on pension systems for government and public service institution employees.

Eldercare

The State Council, China's cabinet, released a document on developing eldercare services on September 13 to encourage investment from the private sector, including the house-for-pension program. The plan allows senior citizens to deed their house to an insurance company or bank, which will then determine the value of the property and estimate the owner's life expectancy, and then grant them a certain amount every month.

The program, while only a proposal, has drawn widespread concern and has been met with mixed opinions. In particular, it has been criticized by some people whose parents have property and fear losing their inheritance.

Meng Xiaosu, President of the Huili Investment Fund Management Co. Ltd., is the first person to propose the program in China.

"In an aging society like China, while many older people don't have a high pensions or big savings, they live in expensive properties, which makes it ideal for them to support a more decent lifestyle in their golden years," Meng said. He said while a lot of elderly people live in apartments in big cities whose value has skyrocketed in recent years, they only paid a small sum as these apartments were distributed to them by the government as welfare under the planned economy.

Meng said that if a 70-year-old man owns an apartment worth 5 million yuan ($820,000) and is estimated to live another 14.8 years, he will be able to collect 27,000 yuan ($4,400) a month.

But Meng admitted that financial institutions planning to sell this product have concerns about its risk caused by possible drops in housing prices and its popularity being undercut by traditional ideas of passing down homes to children.

This scheme has already been launched on trial basis in some cities with few people showing interest. Experts said with the uncertainty over housing prices, life expectancy and interest rates dampens some people's enthusiasm, people also put high expectations on a fairer and better pension system after government reforms.

Zheng Gongcheng said that while encouraging the house-for-pension program, the State Council is not shirking government's responsibilities and the program can only be seen as a supplement to China's multi-layer old-age support system.

Zheng Gongcheng explained that the State Council document also includes content concerning the government's responsibilities to increase contributions to eldercare services and give more incentives to institutions and companies willing to enter the sector. "This signals that the government has attached greater importance to eldercare services in response to the accelerated aging of the population," he said.

Dou Yupei, Vice Minister of Civil Affairs, delivered a speech at a forum on the sidelines of an eldercare exposition in May. He vowed that, by the end of 2015, eldercare services will be available in all urban communities and more than half rural communities and nursing homes will have 30 beds for every 1,000 senior citizens.

China now has more than 40,000 nursing homes with a total of 3.9 million beds and eldercare services and facilities cover 65 percent of communities. According to the Ministry of Civil Affairs, 18 provinces and municipalities have started to distribute special living allowances for seniors older than 80.

"Over the next two years, a national eldercare information database will be established and more IT technology will be applied to improve care for the elderly, whether they choose to live at home or institutions," Dou said.

Email us at: tangyuankai@bjreview.com

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