Wang's pension predicament is just one example of the tremendous challenges facing a rapidly aging but still relatively poor China. The one-child policy, which prohibits most families from having more than one child, is one of the main causes of the problem. Many Chinese families today face what is popularly known as the "4-2-1 phenomenon." That is, four grandparents and two parents, both from single-child families, must be supported by a single child. Already about 14% of the mainland's population is over 60 -- a percentage that will grow to about a quarter in 25 years, saddling China with the world's oldest population.
The peak of the crisis will come in 2030, when the number of workers per each retiree will fall to two, down from three today. That's a worrying prospect in a country where per capita income is just $1,000 a year. Most other countries have reached comparable levels of aging with average incomes three times that, says He Ping, director of the National Institute of Social Insurance in Beijing. "China is still not a rich country even as our population ages. This is a serious problem," says He.
The Chinese government isn't sitting still. In 2000 it began to reform its pay-as-you-go pension system, which covered primarily civil servants and state-enterprise workers, in favor of what it hopes will be a more sustainable program of individual accounts. But only 20% of all workers are now covered, and that's primarily those in the cities. And there isn't enough money. The national pension system has a shortfall of $6.2 billion, which could reach $53.3 billion by 2033, according to the Asian Development Bank. Most provincial pension plans are also in deficit.
China's increasingly mobile population further exacerbates the problem. An estimated 100 million migrant workers are unable to tap their pension funds when they transfer to new jobs. China must move to a system of portable pensions, says Social Insurance Institute's He, who is advising the Labor & Social Security Ministry on this. Other analysts suggest that national pensions -- now funded by contributions from employers, employees, and the Finance Ministry, and by proceeds from a national lottery -- be allowed to invest in a larger pool of assets, including overseas stocks and local infrastructure companies. Most of the money is currently tied up in Treasury bonds and low-yield bank deposits.
More radical moves are under consideration. China is likely to boost gradually the retirement age, now 55 for women and 60 for men, to 65 by 2030. And it might further loosen the one-child policy. Meanwhile, even those with two children, like Ms. Wang, are still worried about their future. Both her children work at the same No. 5 Bureau of the Railways Ministry where she and many other family members toiled. But the ailing employer is several months behind in paying salaries, she reports. "I'm considering finding another job," says Wang. "I might work as a cook for construction workers, but I know that will be very tiring," she says. For now, too many of China's wannabe retirees may have to labor on into their golden years. By Dexter Roberts in Beijing