China to boost fund for rising pension needs

BEIJING - CHINA will expand its social security fund to at least US$200 billion (S$303 billion) within a decade in a bid to meet the surging demand for pensions from its ageing population.

Mr Xiang Huaicheng, the chairman of the government-run National Council for Social Security Fund, said the fund could expand five-fold in less than 10 years from its current US$41.8 billion, the China Daily reported.

Mr Xiang, a former finance minister, said the consensus was that in 2035 the demand for pensions would start to peak.

The World Bank has estimated China will need a fund of around 9 trillion yuan (S$1.8 trillion) by that time, while the Chinese official estimate is set at 2 trillion yuan. Either one is 'an astronomical number', Mr Xiang said.

China has 144 million people who have passed their 60th birthday, accounting for half of Asia's entire population in that age group.

Another 100 million will be added every 15 years or so, and after 2030 the population that will be in the labour force will shrink to less than half, official statistics have shown.

'If we take the matter seriously now, we might be able to avoid a worst-case scenario,' Mr Xiang said. To meet future funding demands, the fund would invest more in overseas markets, he added.

Less than 5 per cent of the fund has so far been invested overseas, far below the 20 per cent cap set by the government, he said.