The Promise of a Better Tomorrow: China's Pension System

By Ying White, World Bank, Washington DC

In developed countries, both public and private sector pension funds are major participants in the capital markets. In the US, for example, pension assets stood at $12 trillion by year-end 2003, and accounted for 20% of stock market capitalization.¹ In Japan, the combined assets of public pension reserves and employee pension insurance programmes totalled 170 trillion yen by March 2003.² In the last few years, pension assets have accounted for over 100% of GDP in the US and around 34% in Japan.

By contrast, as of year-end 2003 China's National Social Security Fund (SSF) had only Rmb132.5 billion in assets, which is equivalent to slightly more than 1% of the country's GDP. Corporate enterprise pension funds had Rmb26 billion in assets by year-end 2002 (equivalent to 0.3% of GDP). These paltry figures come in spite of the fact that in 2000, China already had 89 million people over the age of 65, a figure accounting for almost 7% of the population. By 2030 this number is estimated to reach 150 million, or between 10-15% of the population.