Abstract
The Chinese public has shown increasing concern about the “inadequacy” of the funds available for the Basic Pension Insurance for Urban Employees (BPIUE). The government has managed the issue by balancing the program’s revenue and expenditures each year and by increasing subsidies for it from all levels. These actions have raised a number of questions, such as why the program still needs financial subsidies as the fund’s balance continues to increase. The BPIUE was initiated in 1991, and the combination model of “social pooling” and “individual accounts of employees” was established in 1995 and formally launched in 1998. Also, in 1998, reforms including the downsizing of state-owned enterprises were implemented, and tens of millions of employees of state-owned enterprises entered early retirement. Local governments used funds from the individual accounts to pay pensions to employees based on length of service, and as a result, the individual accounts have remained empty ever since. Based on the definition of social insurance and an empirical analysis of the BPIUE fund, this paper conducts a qualitative and quantitative analysis of the plan from two perspectives, striving to provide an objective explanation and assessment of the pension fund’s inadequacy. On this basis, the paper analyzes the impact of the aging population of China on the existing and future BPIUE fund gap.
Highlights
Background and IssuesChina is an aging society, and according to the National Bureau of Statistics, the working population decreased by 3.45 million in 20121
A large number of working-age rural workers arrive in the city, and they are required to participate in the Basic Pension Insurance for Urban Employees (BPIUE) and fulfill the contribution obligations, but when most of them return to the countryside in old age, the local governments will not pay pensions to them, other than returning their portion of the individual savings20
Regulations issued by the Chinese government, and the initial design of employees’ individual individual accounts has deviated from the insurance principles and is a matter of accounts has deviated from the insurance principles and is a matter of individual savings; individual savings; there is a lack of legal basis for the misappropriation of funds in individual there is a lack of legal basis for the misappropriation of funds in individual accounts since 1998, accounts since 1998, and there is no policy to interpret this phenomenon
Summary
China is an aging society, and according to the National Bureau of Statistics, the working population decreased by 3.45 million in 20121. Before a country becomes an aging should end its pay-as-you-go pension system implemented nationwide in in accordance with the Decision on establishing a unified basic pension and build a dual pension system with a combination of a national basic pension and an individual insurance system for enterprise employees by the State Council. The data are at from the annual announcement of the Ministry of Human Resources and Social Security of China at http://www.mohrss.gov.cn/SYrlzyhshbzb/zwgk/szrs. Beginning with these three questions and based on China’s social background, this paper reveals the policy mistakes of the BPIUE and the reasons for the fund balances, and it explores the issue of sustainability for China’s pension system
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