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or policies of the Asian Development Bank (ADB), or its Board of Directors or the governments they
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Old-Age Support and Protection in China

commented by
Hyun H. Son

The presentation provides a brief outline of China's pension system for urban and rural areas.
Although the presentation has provided little information, the paper that will be prepared after
this workshop should provide detailed information on the mechanics, sustainability, and
effectiveness of the pension schemes. In my view, this paper has the potential to be a good paper.
That said, I have the following comments and suggestions that may be helpful in preparing the
full paper:

a. In the presentation, it is correctly pointed out that the current social protection based
on family support is shifting more towards government-supported programs. The
paper will provide reasons for this shift, and it will also identify the problems
associated with the current system. More importantly, the paper will discuss
implications of these changes to future family relations.
b. It would have been better if this presentation had provided more details of the
possible statistical analysis that would be carried out. What would be the data
sources? It is difficult to provide constructive comments without many details given
in the presentation.
c. The presentation has indicated that the paper will provide details of why family based
social security is breaking down. The demographic transition is one of the important
reasons for the change. It will be useful if the paper spells out more details of
demographic transition in PRC and its impacts on old-age support. The demographic
transition results in higher demand for old-age support while diminishing its resource
base (i.e., active labor force). Thus, the sustainability of old-age support will be an
important issue down the road. This is already being experienced by the social
security systems in Japan and Korea. Since PRC is now on the cusp of economic
development, this is the time to address sustainability issues to avoid problems later
on. The paper could provide policy recommendations to address this issue.
d. The presentation points out the five major problems associated with the current
pension system in PRC:
(i) Fragmentation by urban-rural and region
(ii) Lack of program portability inhibits family support
(iii)Highly unequal program generosity
(iv)Urban-rural and coastal-inland inequalities
(v) Management of pension programs

These are important issues. The paper should elaborate these issues and provide
some policy responses to these problems, if any.
e. It will be useful to provide the profiles of the elderly in China that include (i) where
are the elderly located? (are they concentrated in certain provinces or rural areas?);
(ii) do children living in elderly-headed households have lower or higher school
attendance than the national average? (old-age pension has important implications for
the well-being of children); (iii) poverty status of the elderly; (iv) health status of the
elderly; (v) which elderly are receiving pensions?/ how much?; and asset holdings.

f. The presentation identifies the major problems associated with the current pension
system. But it does not indicate how the proposed or new social protection system
should look like. This may be incorporated in the paper. The paper can also discuss
the costs of the proposed reforms. The adequacy of the proposed system will depend
on how much government can spend in providing such reforms. It will be useful if the
paper provides an evaluation (through simulation exercise) of the potential costs as a
share of GDP and consequences of introducing a non-contributory social pension in
China and the effects of alternative designs for such program on its outcomes. For
instance, a pertinent question to be asked is how much it would cost for the
government to implement a universal old-age pension program in China.

g. Old-age support should not be limited to providing pensions and insurance, especially
if this is seen as a substitute for family-based care. One should also consider the
availability of goods and services designed to meet the needs of the elderly. For
example, are there adequate retirement homes or care centres for the elderly? Are
health centres properly staffed to meet the elderly's health needs? Are there delivery
services that will bring meals or medicines to the elderly who are immobile? Giving
pensions to the elderly will not be enough if they cannot use this money to avail
themselves of goods and services tailored to their needs. Note that the government
does not need to directly provide these goods and services. Since the elderly have
purchasing power from their pensions, the private sector can fill this gap as demand
for these services already exists. However, the government needs to provide a proper
regulatory framework to ensure quality and safety.