Older people in China’s Shaanxi Province are enjoying improved income security thanks to a pension scheme introduced by the Baoji government last year. Pension recipients also feel more respected by their families.

These are the findings of new research carried out by HelpAge International, in partnership with Renmin University in Beijing.

The majority of older people in China’s rural areas have limited access to pension insurance programmes. However, with a rapidly ageing population, China’s government is urgently exploring new initiatives to tackle poverty among older people.

The new Rural Social Pension Insurance Programme in Baoji is one of the first of its kind in China. The local government introduced the programme in July 2007, targeted at three age groups:

• those aged 60 and over at the beginning of the programme, who now receive a pension of 60 yuan (US$8) each month, provided their family members pay the required insurance premiums
• those aged 45 and over, who must pay insurance premiums regularly and will then receive a monthly pension after they turn 60
• those under 45, who must pay insurance premiums for more than 15 years to qualify for a monthly pension after turning 60.

Improving family relationships

Focus group discussions with recipients of the pension showed that it:

• helps pay for necessities such as food, medicine, clothing and water and electricity
• increases economic stability and decreases dependency on others for financial support 
• brings greater respect from other family members and relieves family tensions, because older people are able to contribute to household expenses.

One recipient said: “I was embarrassed to ask the children for money before. Now I feel much better because I have a regular income and can buy anything I want.”

Another added: “We are very excited to get a regular income like urban residents. It was unimaginable before. It’s good to have money in hand to deal with unexpected emergencies.”

The pension also appears to have had a positive psychological impact on older people. It helps them feel more secure and their new-found financial independence has improved their self-esteem. Among the eligible older population aged 60 and over, the take-up rate is 94%.

Challenges ahead

HelpAge International welcomes the benefits brought by the scheme. However, the programme does have its shortcomings.

Discussions revealed that the average monthly expenditure of local older people is about 200 yuan (US$29). So while the 60 yuan (US$8) does help pay for some essential items, it does not meet all their economic needs.

The fact that older people cannot receive the pension unless family members contribute is also an issue. Many younger people may not subscribe because they have migrated to the city to work, or because they have not begun to think about how they will support themselves in old age.

Similarly, if younger family members are not be able to pay the insurance premiums in time, their parents will not receive the pension.

The challenge now will be to address these shortcomings, together with the sustainability of the scheme. HelpAge International believes a universal non-contributory pension for all people over the age of 60 can help ensure older people’s right to economic security.