Seventy percent (70%) of respondents to a survey on elderly care and retirement financing in China say that they have yet to draw up their pension plan, due to ignorance or simply the lack of action, according to a bluebook published jointly by AIA and the Centre for International Social Security Studies(CISS) at Chinese Academy of Social Sciences(CASS).
The bluebook, entitled “2021 Bluebook on Pension Risks for Middle-class People in Large and Medium-sized Cities", is based on the findings of a survey covering 10 cities, namely, Beijing, Shanghai, Shenzhen, Guangzhou, Suzhou, Chengdu, Nanjing, Foshan, Wuhan, and Shijiazhuang. More than 5,000 urban residents with annual incomes of more than CNY100,000 ($15,500) were polled, with special attention paid to their existing old-age security plans, wealth reserves, old-age risks likely to be faced in the future, and their perceptions and actions on elderly care. The survey focussed on those who will reach the legal retirement age within the next 15-25 years.
Key findings
Apart from the abovementioned survey results, major findings include:
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Respondents in general have limited awareness of the impact of aging and fail to understand fully how socialised elderly care works. Among the respondents, 30.8% expect to be taken care of by their children after retirement, and 40.6% choose to rely on themselves and their spouses. This shows that although people have realised the limitations of the traditional concept of “raising children to protect against old age", they have not fully realised the importance of professional and socialised elderly care services.
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There is a large retirement savings gap, and pension funds have not been effectively planned for. Social security accounts for the main source of pension income, and the participation rate in the second pillar of the country's pension system (enterprise and occupational annuities) and the third pillar (commercial pension insurance) is less than 20%, resulting in a relatively low overall pension replacement rate.
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While more than 90% of the respondents express a strong willingness to spend on health protection, effective action is lacking. Around 53.2% of the respondents have not bought any form of commercial health insurance.
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The proportion of respondents participating in the national basic medical insurance scheme is 98.9%, but the penetration rate of commercial health insurance is not high. Only 5.5%, 7.4%, and 8.0% of the respondents have purchased health & accident insurance, critical illness insurance, and long-term care insurance respectively. 20.8% of the respondents have purchased online mutual health insurance, and 22.9% have bought the state-backed huiminbao, an inclusive low-cost supplementary medical insurance plan.
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Among the respondents who purchased commercial health insurance, 63.4% say their medical insurance coverage is less than CNY100,000.
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75.1% of respondents have a preference for fixed-term wealth management assets most of the time. About 32.3% of them still focus on bank deposits.
The bluebook highlights the need of Chinese families for more adequate pension income support and integrated elderly care provisions by households, the community and organisations.
The survey shows that people need to increase their participation in pension insurance and commercial health insurance. They need to start to develop good savings and investment and financial management habits, and plan ahead.