Are the Chinese Saving for Old Age?

Worldwide, older people’s support used to be the adult children’s responsibility. In China, two generations after introducing the one-child policy in the late 70-ies, this becomes an increasingly demanding obligation. The Chinese government took the responsibility to mitigating oldage poverty risks and realized unprecedented progress in pension coverage. At the same time, the household savings increased to about 30 % of disposable income. Built on previous research on the politics of ageing, this study analyses households responses to the established governmental and firm pension programs as well as to the New Rural Pension Scheme (NRPS), introduced in 2009. The central question is: will participation in the established and new pension programs lead to higher current Chinese household expenditures and therefore to lower savings? The China Health and Retirement Longitudinal Study (CHARLS) dataset of 2011 offered the opportunity to study the influence of the recently introduced NRPS. We find that Chinese households with members between 45 and 60 years who expect future Population Ageing (2017) 10:287–310 DOI 10.1007/s12062-016-9159-x Highlights • In China, rural households where one of more members are covered via the New Rural Pension Scheme currently do not expend more than households with members who are not covered by NRPS. • Households where one or more members are covered via a government or firm pension, spend 28 % more on basic goods and 80 % more on luxury goods than households where members are not covered by one of these established pensions. However, this is not a causal relationship. • In China, coverage by pensions, be it in urban or rural programs, does not determine higher household expenditures and therefore lower savings. * C.E. van Dullemen [email protected]; [email protected] I. Nagel [email protected] J.M.G de Bruijn [email protected] 1 Free University, Amsterdam, Netherlands benefits of NRPS do not have higher expenditures than those not covered by NRPS. For the participants in the established, mostly urban pension programs a correlation was found with higher current expenditures (28 % more spending on basic needs, 80 % more on luxury) However, further analysis shows that this correlation cannot be interpreted as a causal relationship. This implies that coverage by pensions, be it in urban or rural programs, does not determine higher current expenditures and lower savings.