Abstract
China’s population is ageing quickly, and its current pension system is facing many significant challenges and institutional drawbacks caused by the failure of the system to clearly define government, corporate and individual responsibilities. At the core of China’s pension reform is the three-pillar design with Chinese characteristics: basic public pension based on the social pooling account (pillar 1); the occupational pension system consisting of financing deficit in the individual account by transferred state-owned assets, enterprise annuities and occupational annuities (pillar 2); and voluntarily contributed pension plans based on personal choice (pillar 3), supported by tax concessions. The government has overall responsibility for system establishment, service management and funding of Pillar I, and plays a regulatory role in system establishment and operation of the 2nd and 3rd pillar.
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Notes
- 1.
China’s social security contributions include pension fund (employer at a rate of 20% and employee at a rate of 8%), medical insurance fund (employer at a rate of 10% and employee at a rate of 2%), unemployment insurance fund (employer at a rate of 1% and employee at a rate of 0.2%), maternity insurance fund (employer at a rate of 0.8%) and work-related injury insurance fund (employer at a rate of 0.5%) as well as the housing provident fund (employer at a rate of 8% and employee at a rate of 8%).
- 2.
OECD, Pension at glance 2013
- 3.
Including SOE shares held by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), the Ministry of Finance, and local state-owned assets supervision and administration commissions, including H shares listed in overseas markets and some red chips. Source: Public information.
- 4.
Wu et al. (2011).
- 5.
The replacement rate has different definition. It may refer to the ratio of the average pension benefits to the average wage or the ratio of individual pension benefits to pre-retirement wage. In the study of Wu Zhong, the replacement rate refers to the ratio of pension benefits to contribution base, which is consistent with the level of pension benefits in the study.
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Dong, K. (2018). A Strategic Rethink on Pension Reforms in China. In: Dong, K., Yao, Y. (eds) Annual Report on Financing Old Age Care in China (2017). Springer, Singapore. https://doi.org/10.1007/978-981-13-0968-7_4
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DOI: https://doi.org/10.1007/978-981-13-0968-7_4
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