Recently, the topic of “After paying social security for 15 years in China, can you just sit back and wait for retirement?” has drawn public attention. The official Chinese media claimed that with social security, “the more you pay, the more you get,” but this statement has been met with ridicule by many netizens.
According to China’s “Social Insurance Law,” individuals participating in the basic endowment insurance who have paid contributions for a minimum of 15 years by the legal retirement age can receive a monthly basic pension.
On April 27th, CCTV News in China stated that many people believe that after paying social security for 15 years, they can simply wait to receive their retirement pension. However, it is important to remember the principle that the more you pay into social security and the longer you pay, the more benefits you will receive.
The report quoted Chuh Fuling, the director of the Social Security Research Center at the Central University of Finance and Economics, explaining, “Individuals with shorter contribution periods have less accumulated in their accounts. Those who contribute for 30 or 40 years have more savings in their accounts, resulting in a higher personal pension. Therefore, a longer contribution period will increase the total amount of pension received over a lifetime.”
Chuh Fuling also mentioned that self-employed individuals are not obliged to contribute to social security, saying, “Whether they contribute for 15 years, 18 years, a few years, or even choose not to contribute, it’s up to them.” However, considering the principle that the more you pay and the longer you pay, it is advised not to stop contributing.
The topic of “Can you sit back and wait for retirement after paying social security for fifteen years? The explanation has arrived” trended as the number one search on Baidu on April 27th.
In response to this, Chinese netizens have made mocking comments:
“Don’t be fooled. It’s safest to have the money in your own hands. After paying for 30 or 40 years, there’s still uncertainty whether we’ll receive anything.”
“Just paying for 15 years, even if you pay extra, it all depends on fate if we will actually receive the retirement pension we expect.”
“The money we’re paying now is for the current retirees. How much you will receive in retirement depends on whether the current young people are contributing and how much. If retirement is delayed to 65, how many years will it take to break even with experts saying the more you pay, the more you get?”
“After struggling to reach the retirement age, if the retirement age is extended again and you have to work hard for another 5 years only to pass away, all efforts will be in vain.”
“Don’t trust the experts. They may mislead you. If you paid for 15 years and have no money left, who will you turn to? Who’s responsible for the past food coupons, stocks, job purchases that have all gone to waste shortly after being paid and still haven’t been recovered until now?”
In the current situation of China’s economy declining and high unemployment rates, an increasing number of young people in recent years are reluctant to contribute to social security, with some even opting out. Last year, NetEase published a self-media article stating that 38 million people temporarily halted their endowment insurance, while another 43 million directly opted out.
Many netizens cite reasons for opting out, such as: “Social security is supposed to be for retirement and stability, but when you lose your job and can’t even afford meals, who is social security protecting?” “The retirement age is constantly being delayed, just when you’re about to reach the required age, it’s pushed back again, and you never seem to receive it.”
A columnist from Dajiyuan, Wang He, analyzed that, “China’s social security system is the largest in the world. First, the government’s financial contribution is minimal compared to the West. Secondly, within the government’s financial subsidies, the disparities between urban and rural areas, as well as between officials and ordinary citizens, are too significant, leading to intense contradictions.”
Wang He pointed out that people opting out of the system have two main reasons: firstly, “If my income is gone, the company is struggling and can’t afford to pay.” Secondly, “Many people calculated based on the current endowment insurance contributions that the future returns wouldn’t be worth it. If it’s a loss, why should I continue to contribute?”
“These issues reflect two main points: the current economic difficulties in China, decreasing incomes for the general public, and struggling enterprises; secondly, the lack of trust in the government.” he said.
As China’s economy faces a deep crisis, and amid waves of business closures, layoffs, and rising unemployment, the “China Pension Development Report 2023” states that a delayed retirement policy will be implemented, with 65 years possibly being the ultimate adjustment.
A Chinese entrepreneur, Mr. Huang, told New Tang Dynasty: “Rural populations don’t have retirement pensions. As long as they’re alive, they are forever working. The delayed retirement policy only applies to urban employees. Authorities say that delaying retirement to 65 doesn’t mean you can actually receive your salary at that age because the company won’t allow you to work till then. Delaying retirement until 65 means that regardless of whether you’ve contributed for 15 or 20 years, you can only start receiving pensions at 65. If you’re unemployed at 50, you won’t receive any money for those 15 years and have no pension.”
Mr. Huang highlighted that even if a person lives until 80, they would only receive 15 years of retirement pension, resulting in losses for the 25 years of contributions made earlier. Therefore, the issue of retirement pensions is a huge pitfall in the system.