What Happened: China's urban worker pension fund will be empty by the year 2035 due to a shrinking workforce and insufficient contributions, according to findings by the World Social Security Center at the Chinese Academy of Social Sciences, Caixin reported April 15.
Why It Matters: China is facing a demographic cliff in the coming years similar to other Asian countries, which is aggravated by the legacy of its one-child rule as well as lax enforcement, local mismanagement and various exemptions to promote employment. The ongoing economic slowdown has only compounded efforts to get the system back on track.
Background: The urban worker fund was established in 1997 and is designed to replace roughly 59 percent of an employee's salary on retirement through individual and employer contributions.
- In China, an Unprecedented Demographic Problem Takes Shape (Jan. 4, 2019)
- China Abandons the One Child Policy (Oct. 29, 2015)
- Urbanization and Demographics Could Skew China's Economic Rebalancing (Sept. 3, 2014)