A] Prelude
For more information on pension systems, risk and coverage, feel free to visit our dedicated webpages:
https://expatpensionholland.nl/china-expat-pensions
https://expatpensionholland.nl/global-pillars-systems
https://expatpensionholland.nl/global-investments-risks-0
https://expatpensionholland.nl/global-social-security-coverage
B] The Issue
In a significant move aimed at addressing the pressing global issue of aging, a top university in Shanghai has launched an innovative tool for sustainable and inclusive pension systems, which is expected to help China and other countries deal with the challenges.
C] The Details
The China Pensions Index, which was created by East China Normal University, or ECNU, offers a comprehensive framework to assess and enhance pension systems, giving valuable insights to nations grappling with demographic shifts, a leading aging finance expert said.
“The index is a valuable tool to help evaluate a pension system in terms of sufficiency, inclusivity, fairness, and sustainability,” said Professor Lu Jinfei, head of the China Inclusive Aging Finance Research Center, or CIAFC, at ECNU.
The data-driven tool, which is freely accessible online, aims to provide objective references for policymakers, researchers, and industry stakeholders so they can better understand and improve China’s pension landscape and navigate the complexities of pension finance, said Lu, who was instrumental in the launch. She said China’s aging population is a global concern, with more than 26 percent of the world’s population aged 60 and above residing in the country.
As the world’s second-most-populous nation after India, China is under international scrutiny for its approach to pensions. The introduction of the pensions index offers a good paradigm to evaluate pension systems, which can also be useful for other nations grappling with the same problems, the professor explained.
Zhu Xu, the director of the Endowment Insurance Department of the National Social Insurance Center, said he believed the launch of this index was a significant development. “It offers valuable data, which help us understand the pension systems in a much more comprehensive way,” said Zhu, who is one of the country’s top pension policy advisors.
China has the world’s largest pension systems, encompassing more than 1 billion citizens. This includes 550 million people covered by the resident pension program and 520 million by the employee pension program. In addition to the primary public pension pillar, China has developed supplementary enterprise and occupational annuity programs that cover more than 70 million individuals. The country’s total pensions funds have surpassed 13 trillion yuan ($1.82 trillion), according to Lu.
The recent nationwide rollout of the individual pension system in late 2024 has already attracted more than 71 million accounts, with accumulated funds exceeding 50 billion yuan ($6.95 billion). “Given China’s population of 1.41 billion, pension arrangements are of paramount national importance,” she said. However, challenges persist, including urban-rural disparities, uneven pension benefits and the need for enhanced sustainability amid rapid aging, the professor said.
These issues necessitate active engagement from research institutions, experts, financial organizations and policymakers to devise robust solutions. At a recent forum in Shanghai to launch the index, CIAFC invited top experts, policymakers, and industry leaders to discuss how to leverage technology to broaden pension coverage, formulate new strategies to mitigate urban-rural disparities, and integrate international best practices into China’s pension framework.
The event also underscored the critical role of financial literacy and public awareness in driving successful pension reforms. Lu said the vast scale of China’s pension market presents both opportunities and challenges. With a rapidly aging population and increasing demand for innovative financial solutions, China is actively seeking to learn from international pension research institutions and financial organizations with mature pension management expertise.
“We welcome partnerships with international organizations, to share insights, develop best practices, and create a more inclusive future for pension systems worldwide,” she said.
CIAFC is generally regarded a leading authority on pension finance research in China. Through data-driven analysis, policy advocacy, and international collaboration, the center is dedicated to advancing inclusive and sustainable pension systems for China and the world.
D] Japan: Impact of air pollution in aging societies
Air pollution is a growing health issue worldwide and its impacts are often underestimated in aging societies like Japan. A new study led by researchers from the University of Tokyo highlights how fine particulate pollution, or PM2.5, not only worsens health outcomes. It also creates significant socio-economic challenges in regions with aging populations and limited medical resources. The researchers hope these findings motivate policymakers to tackle the interrelated issues behind this problem.
PM2.5 refers to microscopic particles of pollution small enough to penetrate deep into the lungs and bloodstream, leading to severe respiratory and cardiovascular diseases. PM2.5 are small enough to evade the body’s natural defenses in the nose and throat, making direct prevention difficult. This becomes especially problematic in elderly populations.
As we age, our immune systems weaken and our bodies are less able to defend against pollutants. Even moderate exposure can exacerbate pre-existing conditions, leading to higher hospitalization rates and premature mortality. The study provides new insights into impacts of PM2.5 in aging regions, with a particular focus on the mismatch between those impacts and regional medical resource distribution.”
The study focuses on Japan, a country where almost 30% of the population is aged 65 or older. Researchers examined the relationship between PM2.5 exposure, health care disparities and economic impacts. They found that rural regions in western Japan, where aging is more pronounced, suffer disproportionately from the dual burden of PM2.5 pollution and less comprehensive medical infrastructure. These areas face higher economic costs compared to urban regions, which tend to be much better equipped and staffed.
“Many rural areas lack the specialized hospitals and trained professionals needed to treat diseases exacerbated by PM2.5, such as strokes and heart attacks,” said Long. “For some working-age seniors, PM2.5 exposure is linked to increased rates of severe illnesses, forcing many to leave the workforce earlier than planned. This not only affects their financial independence, but also places additional pressure on younger generations to support them.”
The study’s economic analysis reveals PM2.5-related deaths and illnesses contribute to rising socio-economic costs that exceed 2% of the gross domestic product in some regions. The inter-generational inequality PM2.5 impacts poses a challenge for policymakers aiming to ensure both economic stability and equitable access to health care. The researchers emphasize these issues are not limited to Japan. Countries with aging populations and rising pollution levels, including China and parts of Europe, might face similar challenges.
“Our framework can be adapted to analyze these impacts globally. By identifying the most vulnerable populations and regions, governments can allocate resources more effectively,” said Long. “For example, stricter pollution controls, investments in health care infrastructure and international cooperation to address transboundary pollution could all help. And expanding green infrastructure in urban areas can increase plants which naturally filter pollutants, while telemedicine could improve health care access in remote regions.”
Long and her team also suggest policies targeting vulnerable populations, such as subsidies for elderly care and community health programs. “The health of our elderly is not just a personal matter, it’s a public issue with profound social and economic implications,” said Long. “Acting now could save lives and reduce long-term costs for everyone.”
E] Finally
It is encouraging to see that renowned international institutions are actively assisting governments with how to best handle the increasing longevity and the related vast issues.
From our perspective auto-enrollment in Pillar 1+2 pension plans and the increased introduction of Pillar 3 individual private pension plans with substantial tax benefits seem like a required logical first step towards a long term funding solution.