China’s already tense pension system is facing the risk of depleting funds within the next decade, and now it is being further challenged by resistance from the younger generation.
Millions of young Chinese are opting out of the national pension program, adding greater pressure to a pension system already in distress due to historically low birth rates and an aging population, further impacting the struggling Chinese economy.
According to Bloomberg, Shenzhen online influencer Gao Pengcheng has not enrolled in any voluntary pension plan, and neither have most of his friends. The monthly contribution of nearly 1,500 yuan towards pension accounts for about one-fifth of his salary, but he would rather spend money dining out or buying luxury items. He believes contributing to the pension fund is meaningless because by the time he retires, the fund may have already dried up.
“In theory, you are saving for your own retirement; but in reality, you are using your own money to support others. Why should I use my money to support others?” he said.
Over the next decade, more than 20 million workers in China are expected to retire annually, while the number of contributors to the pension system in the labor market continues to decline. According to data from the Chinese Academy of Social Sciences (CASS), this crucial system supporting 460 million people may see an annual deficit for the first time in four years and face the risk of fund depletion by 2035.
The decision of the younger generation in China to opt out of the pension program will further worsen this crucial project that requires financial support. With the looming threats of inflation and a sluggish real estate market, the pension issue has undoubtedly heightened the pressure on authorities, posing yet another major challenge to the Chinese economy.
Compared to other countries facing aging populations, China’s situation is particularly severe. Since 2022, China’s population has been shrinking. The United Nations predicts that by 2100, China’s population could decrease by half.
The inability to guarantee pension payments will not only raise questions about the legitimacy of the CCP’s rule, especially among the disillusioned younger generation, but also potentially stir up social discontent and weaken economic growth.
According to data from the think tank of the CCP, the funding size of the pension system is projected to peak at 7 trillion yuan in 2027, then rapidly shrink and possibly be depleted by 2035.
Against the backdrop of uncertainty surrounding the pension system, it is not surprising that flexible workers like Huang Haiyan choose not to participate in the pension plan.
The 31-year-old software developer from Guangzhou stopped contributing to the pension plan in January 2024 because she could not afford the fees and feared that the fund would be depleted by the time she retired.
“Who knows if the pension system will even exist by the time I stop working?” she said.
According to the institute’s report, in recent years, about one-fifth of participants in urban pension plans have not contributed, with 38 million individuals ceasing payments in 2013 alone.
Most of these flexible workers are under 40 years old, and around 70% have monthly incomes of less than 8,000 yuan. With youth unemployment rates approaching 19%, contributing to the pension fund is an unreachable goal for these individuals.
The younger generation shows a generally pessimistic attitude towards potential pension reforms and measures like raising the retirement age.
Gao Pengcheng said, “Instead of paying so much, it’s better not to pay at all. I have no idea what the Chinese economy will look like in forty years when I retire. It is uncertain whether the money they return will cover living expenses.”
Low wages and dim job prospects have led many young people to choose a “lying flat” lifestyle, avoiding getting caught up in cutthroat workplace competition. Terms like “historical garbage time” on the internet symbolize China’s predicament for many.
Humphrey Yang, a 24-year-old tango instructor, said he has never contributed to any government social security scheme. He stated, “I will work until I die.”
He saves 15% of his monthly income of about 20,000 to 25,000 yuan and pays for medical insurance himself.
Chinese scholars warn that those not participating in the pension plan and unable to save on their own will face a miserable old age. However, young people are ignoring these warnings.
Long Bai, a 37-year-old gym employee, said he would at least reconsider joining the pension plan by the age of 45.
“We are not fools,” Long Bai said. “The future of this country is uncertain, and young people know they are just supporting the older generation. Even if you pay, the returns are minimal.”