From Business Week:
The one-child policy combined with a large aging population means pensions are in danger of falling short. What’s the solution?
Time is running out for China’s pension system. The one-child policy has created the 1-2-4 phenomenon within many of the country’s households – one child, two parents and four grandparents. With the dependency ratio doubling by the generation, China’s working-age population is expected to peak in 2010 and by 2040 there will be two workers for every one retiree, down from six to one in 2000.
Based on current progress, there won’t be enough money in public or private pensions to support the elderly – and that’s discounting the rural population uncovered by the state system. Working with institutions such as the World Bank, the Organization for Economic Cooperation and Development and the Asian Development Bank, Stirling Finance chairman Stuart Leckie has run a number of projects looking at the holes, and potential plugs, in China’s pension system. He told China Economic Review how the present state of affairs came about and where the road may lead from here.[Full Text]