CHINESE PENSION SYSTEM

June 9, 2010 at 7:14 pm | Posted in China, Economics, Financial, Research | Leave a comment

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[pensions]

H Oksanen: The Chinese pension system

oksanhe (heikki.oksanen@ec.europa.eu)

Wed 6/09/10

Dear Colleague

Please note that my paper “The Chinese pension system — first results on assessing the reform options”, is published as No 412 at

http://ec.europa.eu/economy_finance/publications/economic_paper/2010/index_en.htm

Abstract
The aim of this paper is to analyse options for reforming the fragmented Chinese pension system that covers only 55 % of urban employees and a very small part of the rural population. After a brief history of pensions in China we present recent reform proposals and then discuss principles of pension reforms, with particular attention to reducing the pension contribution rates so that compliance could improve and coverage increase. As the Chinese population is ageing fast, we are presenting transition to a notional defined contribution (NDC) system as a model for adjusting the pension rules for increasing longevity. Transforming the accrued pension rights into NDC accounts and starting to apply the new NDC-inspired rules on indexation is not necessarily a jump into the unknown for the Chinese pensions system. Rather, it could be a useful and long-awaited clarification to the rules and a way to move towards a more uniform system nationwide. With the help of a simulation model based on Chinese data we produce scenarios for a range of pension reforms and assess their properties.

I hope you enjoy reading it. Please feel free to forward it to your colleagues and anybody potentially interested. Comments for further work are most welcome.
Heikki Oksanen
Adviser (Mr.)

Eur
opean Commission
Directorate General for Economic and Financial Affairs

Email: Heikki.Oksanen@ec.europa.eu

[pensions]

H Oksanen: The Chinese pension system

http://ec.europa.eu/economy_finance/publications/economic_paper/2010/index_en.htm

oksanhe (heikki.oksanen@ec.europa.eu)

Wed 6/09/10

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