Analysis: China’s Pension Puzzle — Why Some Retirees Make More Than Active Workers
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A growing paradox within China’s pension system, where some retirees earn more than people still in the workforce, is fueling a debate over intergenerational fairness.
“The current pension payout is a bit too high compared with in-service wages, and this is a big problem,” said Mao Zhenhua, chief economist at China Chengxin International Credit Rating Co. Ltd., at a recent forum. “The retirement system is to guarantee people’s basic living, not for them to live a very elegant life.”
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- China’s pension system faces criticism as some retirees earn more than current workers; e.g., retired teachers get 9,000 yuan monthly, while active ones earn 4,000 yuan.
- The pension adjustment mechanism causes discrepancies, sometimes giving earlier retirees higher pensions than those retiring later.
- Experts urge reforms linking pension growth to inflation, wage and economic growth, and fund sustainability to address inequity and encourage longer workforce participation.
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Who’s Who
- China Chengxin International Credit Rating Co.Ltd.
- China Chengxin International Credit Rating Co. Ltd. (CCXI) is a credit rating agency in China. Mao Zhenhua, its chief economist, expressed concern that China's current pension payout is too high compared to in-service wages, stating that the retirement system should guarantee basic living, not an "elegant life."
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