China wants young people to put money away for retirement. Tao Swift, an unemployed 30-year-old, is not interested in hearing it.

“Retire with a pension?” he asked. “I don’t hold much hope that I can definitely get my hands on it.”

Tao, who lives in the southern city of Chengdu, is not alone in thinking this way. On social media forums and among friends, young people are questioning whether to save for old age. Some are opting out, citing the shortage of jobs, low pay and their ambivalence about the future.

Their skepticism betrays the enormous challenge for China’s leaders. Over less than three decades, the country has changed from a young society to an aging one. Seven straight years of plummeting births are pushing up the day when there will be fewer people working than retirees.

The fast-changing demographic profile is putting tremendous strain on China’s existing underfunded pension system. An average retirement age of 54, among the lowest in the world, has made this stress more acute.

A grinding economic slowdown, the worst since China embraced capitalism four decades ago, is leaving many people out of work or with little room to put money aside.

China has passed a demographic Rubicon just as many other countries have before it. The problem of underfunded retirement programs is not unique to China, either. But China’s demographic and economic troubles are colliding, shaking confidence in the pension system.

China is aging so quickly that over the next quarter-century, 520 million people, or nearly 40% of its current population, will be older than 60. And over the next decade the public pension will run out of money, according to the Chinese Academy of Social Sciences, a government research institution.

“Because of the aging population, people are skeptical about their future pensions,” said Tao Wang, the chief China economist at UBS. “They worry that in the future the payout would be less.”

China’s leaders could begin to tackle the problem by raising an “alarmingly low” retirement age, Wang said. They have talked about doing so gradually, but haven’t yet taken action.

Recent history has also contributed to the problem. Until the 1980s, China had a planned economy, and state-owned enterprises paid salaries to workers until their deaths. As officials took on market-oriented reforms, they also set out to create a more inclusive pension system.

In the first decades after China opened its economy to the world, the Communist Party prioritized growth, forgoing the investment needed to build a broader social safety net. And as officials reformed state-owned enterprises in the 1990s, tens of millions of people lost their jobs.

Officials began to create a new pension system that would eventually cover most of the population under three pillars. The first is a public and mandatory program that has the largest enrollment, with just over 1 billion people. It is made up of a basic plan for the jobless in rural and urban areas, as well as migrant workers, covering more than 550 million people, and an employment-based plan that covers 504 million employees.

The second pillar of China’s pension system is private and employment-based. It is voluntary for companies and covers far fewer people.

The third and most recent, also private and voluntary, is a personal pension. It was introduced in 2022. With the public pension coming under more financial stress, officials started offering tax benefits much like an individual retirement account in the United States.

The rollout of private pensions, which are still in pilot programs in dozens of cities, coincided with alarming news: China’s population was beginning to shrink for the first time in its modern history.

Working professionals like Xuan Lü, 27, are required to contribute part of their salary to one of the public pensions. Xuan, who is an exhibition planner in Beijing, said he didn’t think too much about the roughly 5% of his income that is set aside each month.

“It’s too early to worry about these things,” he said.

But over the past year another problem has emerged: More people, whether they are unemployed or doing part-time or freelance work, are pausing their contributions or simply opting out.

“The number of people who have decided tactically not to contribute or join the system is quite large,” said Dali Yang, a professor at the University of Chicago. “It has gone up very substantially.”

Experts also caution that if China doesn’t change the retirement age, it will need to reduce the benefits, which they say may be too generous in some cases. In 2022, the national average monthly payment for the public employment pension was $500, and just $28 for the basic state pension. But the contributions and benefits varied drastically depending on the city and province.

There are thousands of different pension plans, and each is managed by a local authority. How much retirees receive is linked to a local government’s finances and the size of a given pool of pensioners. Some pensions have as few as 30,000 participants, according to one study.

In some prosperous regions, as many as eight workers support each retiree. But in poorer areas, there are about two workers for every retiree.

With pressures mounting, worried Chinese officials and experts have taken to nagging young people to save and enroll in the private pension scheme.

One well-known professor has urged young people to skip their daily coffee and put the money into a fund. Another has warned young people that the basic pension will not be enough to survive on when they are old.

For some young people, the urgent calls are backfiring.

“Their appeal has a reverse effect,” said Lumiere Chen, 27, a private insurance agent in Beijing whose customers are around 35. “We are annoyed by more and more appeals.”