Cai Fang: The Main Challenge in Pension Security is Not the Funding Gap, but How to Share the Dividends of Increased Labor Productivity

How does the AI · Elderly Care Dividend Sharing Mechanism benefit seniors?

On March 22, the 2026 Annual Conference of the China Development Forum was held in Beijing. Cai Feng, a member of the Chinese Academy of Social Sciences and former Vice President, discussed “Investing in People” at the “Opportunities and Challenges of Population Changes and Economic Growth” seminar. He believes that the current focus on combining investment in physical assets and investment in people actually represents a new height of integration, which involves reallocating resources—shifting from a focus on physical investment to greater investment in people.

Cai Feng highlighted key areas of investment in people, including “Three Education” (birth, nurturing, education), employment, and elderly care. He pointed out that investing in reducing the costs of the “Three Education” (birth, nurturing, and education) is not about price control but about increasingly incorporating these into the basic public service list, with the government bearing the main expenditure responsibility. This would significantly reduce household and individual spending in these areas, making it easier to increase birth rates.

Cai Feng noted that the declining birthrate has led to an oversupply of educational resources at all levels, resulting in school closures and mergers. To address this, he suggests reconfiguring resources through “peak shaving and valley filling.” For example, the number of kindergartens, elementary schools, and junior high schools has decreased, while high schools have increased. However, vocational secondary education is decreasing, and higher education is expected to peak in the future. This means educational resources at different stages must be coordinated and unified, but currently, different departments manage these stages separately, and administrative integration is insufficient. A comprehensive approach is needed to reallocate resources and substantially increase investment in education.

Regarding employment issues, Cai Feng pointed out that the current problem has shifted from a quantitative employment contradiction to a structural one, especially concerning the “one old and one young” (young workers and older workers). Employment difficulties are most severe for these groups, and public employment services should be used to address this.

Additionally, Cai Feng discussed elderly care, emphasizing that from the perspective of potential productivity growth and AI empowerment, productivity can outpace aging. The main challenge in pension security is not a funding gap, and there is no need to repeatedly fall into “actuarial panic.” Instead, the focus should be on sharing the dividends of increased labor productivity, especially ensuring that seniors benefit equally. He believes that the pay-as-you-go pension system is a form of sharing productivity gains and should be maintained as the primary pillar. Furthermore, efforts should be made to improve the保障 level and inclusiveness of urban and rural residents’ pension schemes.