Effects of public pensions on elderly poverty: insights from an ageing China

ABSTRACT While the problem of elderly poverty in China has been addressed in many studies, few systematically examine the capacity of public pension benefits to reduce poverty. To fill the research gap, this paper aims to understand better the effect of China’s public pensions on poverty relief. The paper shows that, while the majority of Chinese people have been covered by public pensions, the pension that pertains to those outside the formal labour market does not effectively prevent substantial numbers of pensioners from poverty because of pension inadequacy. The phenomenon of pensioner poverty suggests that, to minimise poverty in old-age, as important as expanding pension coverage is guaranteeing pension adequacy, particularly for the informal workforce. China’s experience for tackling elderly poverty through public pensions may provide insights for other countries considering the expansion of pension coverage.