Elderly told to use homes as collateral

Elderly people in the country are encouraged to use their property as collateral for a loan from banks, in an effort to give a boost to their existing pension, the State Council, China's cabinet, said in a latest circular.

The plan of expanding this project nationwide came after several financial institutions in some regions piloted it on a trial basis, said the circular.

The country's rapid increase in population aged over 60, from 194 million by the end of 2012 to 300 million in 2025, has put huge pressure on the pension system, it added.

The State Council did not mention when and how this project would be implemented, however, the Beijing News over the weekend quoted a Ministry of Civil Affairs official as saying that a detailed plan is expected to come out early next year.

The major way of conducting this is that after the elderly mortgage their properties, they get money from financial institutions, which will take the properties' ownership after the elderly pass away.

Controversies have arisen as many doubt if a plan adopted from overseas can smoothly suit the domestic situation, since in the country, a property owner can only have the property ownership for up to 70 years.

Financial institutions across the country also expressed their concerns as how the ownership will be renewed after it expires.

"China's property law stipulates that unless the State needs to retrieve the land for development, people can continue to hold their property ownership, but how the ownership would be renewed is unclear," Gu Yunchang, vice chairman of the China Real Estate Association, told the Global Times on Sunday.

"This is a problem for every property owner, both individual and business alike," Gu added.

However, as recourse to supplement pensions, the project hasn't earned much support.

Some 70 percent among 100 senior citizens in a poll by the Guangzhou Daily Saturday said they will not be part of the project.

A senior resident was quoted as saying that her children would not agree and she would like to leave it to her children.

"The project shouldn't be entirely copied from overseas," Yang Tuan, professor at the Institute of Sociology of the Chinese Academy of Social Sciences, told the Global Times, adding that it's not so realistic for it to be implemented in China.

"Many elderly people are not independent to make the decisions on properties as they are very much influenced by their children," Yang noted, adding that the ownership of some properties does not totally belong to the elderly dwellers as their apartments were allocated by State-owned enterprises or the government for which they used to work.