Coronavirus: China’s state pension fund under increasing pressure after fee cuts to help struggling businesses
- Businesses can reduce or even stop contributions to provincial pension funds amid the outbreak in an effort to help them weather the current economic storm
- But China’s state pension fund was already under pressure from an ageing population, with fears it could run dry by 2035 even before the pandemic
China’s short-term goal of pulling its economy out of the trouble created by the coronavirus pandemic is in danger of exacerbating the existing pressure on its national pension system already strained by an ageing population.
This is part of a concentrated effort by governments at all levels with China’s economy set to contract in the first quarter of 2020 for the first time since 1976. The outlook for the world’s second largest economy is heavily clouded by the sharp downturns in the US and European economies as the pandemic continues to spread.
The move to reduce contributions, though, will only worsen the already acute problem of paying the rapidly rising number of Chinese retirees, underlining issues faced by local government with their already overstretched budgets.
