As Asia's Pension Funding Crisis Deepens, Could China Turn to Cryptocurrencies For Help?

Just as the health effects of the COVID19 pandemic are felt the most by those with pre-existing conditions – the economic effects are also being felt most in areas of society that were already compromised in the pre-pandemic era. While the underfunding of pension funds in the US has already reached trillions of dollars and with the post-pandemic landscape seeming bleak for some, the evolution of blockchain technology may present solutions. The race to leverage blockchain to solve the pension funding crisis is on and Asia’sheavy investment into the crypto space could mean they are poised to win big as a result!

Despite the US and Asia differing and contrasting in so many ways, one area which they reflect each other closely is that of the risk posed to their population from underfunding of (primarily public sector) pension funds. In fact, pressures on pension funds have caused many nations to make moves to significantly increase their age of retirement in the near future.

China, Japan and India, in particular, will need to take strong action sooner rather than later if they are to avert what could represent a major catastrophe; as their ageing populations receive less and less governmental support.

As early as 2017, the World Economic Forum warned that a retirement savings gap – or shortfall between what people currently save and what they need for an adequate standard of living when they retire – would balloon from US$70 trillion to US$400 trillion in 2050, in just eight countries. Four of the eight countries with the largest retirement savings gap – China, Japan, India and Australia – are in the Asia-Pacific region.“

source: Asia Times

Numerous other Asian nations are also struggling with similar problems and it may fall to the willingness of the people of those nations themselves to take action to ensure their own wellbeing as they reach retirement age.

Based on the 2019 Melbourne Mercer Global Pension Index, which compared 37 retirement systems worldwide, Asia’s fell 10 points short of the global average when it comes to adequacy, with countries like South Korea, the Philippines, China, Japan and Thailand ranking near the bottom.“

source: Asia Times

Despite China’s vast growth and capacity for manufacturing and productivity, the difficulties of recovering from the COVID19 pandemic will leave a scar for some time. Combined with a variety of demographic and management challenges, China’s overall economic state has meant that many among the currently employed generations could find themselves without the support that previous generations had taken for granted.

Those born in the 1980s could be the first generation in modern China to get no pension when they retire in 25-30 years if the gaping hole in the country’s pension balance sheet cannot be filled.”

source: Asia Times

In fact, the effects of increasingly ageing populations throughout most Asian countries are projected to lead to ever greater risk and financial insecurity for the entire region.

source: Asian Development Bank (UN)

Self Reliance or Centralised Dependence?

The apparent centralisation of Chinese society co-exists alongside a strong capitalist and increasingly individualistic attitude among many Chinese people. The recent disappearance and furtive reappearance of China’s best known billionaire (founder of Ali Baba) Jack Ma, highlights the sometimes tense relationship between Chinese innovators and the Chinese government’s hierarchy/regulators. While the collectivist nature of the Chinese system is never far away, the pragmatic path towards balance means that bounded self determination continues to thrive for those Chinese people willing to bravely make their own decisions.

a number of western and northeastern provinces such as Liaoning and Jilin … would have defaulted on pension and welfare payments already, had it not been for central government cash aid over the years.“

source: Asia Times

With so much at stake when bad decisions are made by centralised policy makers and with so much of the technical power behind the world’s largest cryptocurrency, Bitcoin, being centred in China’s privately owned, giant crypto mining warehouses – we may yet see individual creativity playing a pivotal role in resolving China’s retirement challenges.

Asia’s Embrace of Blockchain Powered Pensions

While the people of China, South Korea and other Asian nations are well known for their enthusiastic support for various cryptocurrencies, the idea that the relatively new technology could resolve their pension worries is not one that governments appear to have fully considered. The lack of a structured approach to managing retirement funds using cryptocurrencies is also another reason for planners tending to favour more traditional solutions to pension underfunding.

The reality, though, is that there is only so far that old ideas can go when trying to solve problems of such an unprecedented scale. At some point, more radical options need to be considered and as new cryptocurrency based pension products emerge and mature, the world may be surprised to witness the speed at which some Asian cultures latch hold of them as viable solutions for the long term.

The analysis of high profile mainstream commentators, including the World Economic Forum, has been that pension providers must make use of emerging technology to increase freedom of choice and flexibility for pension holders if we are to improve the situation globally. The transparency and agility that blockchain technology delivers are absolutely in alignment with these goals.

Financial service providers need to redesign products and tools and make it easier for people to understand their financial position.“

source: Asia Times

Blockchain projects such as SVCS are leading the way in offering solutions for evolving the public sector pension landscape and are spearheading the kind of radical shifts in perception that are needed to overcome long-standing systemic deficiencies. The SVCS team are specifically targeting the US and Asian markets as it is clear they both urgently need new retirement options and also both happen to be extremely receptive to blockchain technology in general.

With public sector pensions straddling the space between government and citizenry in such a personal and essential way, the SVCS vision of simultaneously providing positive solutions for both pension fund managers and retirees is particular exciting. While the full plan for SVCS’s next generation digital pension has yet to be made fully public, the overall goal is to provide a blockchain based solution that helps fill the pension gap by empowering workers while at the same time also empowering beleaguered public services directly.

The full benefits of such an approach may not be known for some time, since clearly this form of financial service is somewhat experimental and will no doubt need to evolve before reaching it’s full potential. None the less, the stratospheric acceleration of cryptocurrency growth in recent years is not something to overlook, especially when faced with such largescale financial concerns.

Only time will tell which world region will fully embrace cryptocurrency and blockchain technology first as a valid option for retirement support, however, it is very likely that given the global vision of the SVCS team, their project will be at the forefront of the process.

For more information on SVCS, you can read the project’s whitepaper at The token is already being traded on several exchanges and for an up to date list of them, check out the SVCS page at CoinGecko.

Disclaimer: This blog is provided for informational purposes only and is not

providing or intending to provide financial advice. All readers are advised to do

their own research when deciding where to invest and to take independent

financial advice from a professional concerning investment decisions.

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