Dorfman, Mark C.Holzmann, RobertO'Keefe, PhilipWang, DewenSin, YvonneHinz, Richard2013-04-092013-04-092013-02-27978-0-8213-9540-010.1596/978-0-8213-9540-0https://hdl.handle.net/10986/13102China is at a critical juncture in its economic transition. A comprehensive reform of its pension and social security systems is an essential element of a strategy aimed toward achieving a harmonious society and sustainable development. Among policy makers, a widely held view is that the approach to pension provision and reform efforts piloted over the last 10-15 years is insufficient to enable China's economy and population to realize its development objectives in the years ahead. This volume suggests a national pension system that no longer distinguishes along urban and rural locational or hukou lines yet takes account of the diverse nature of employment relations and capacity of individuals to make contributions. This volume is organized as follows: the main text outlines this vision, focusing on summarizing the key features of a proposed long-term pension system. It first examines key trends motivating the need for reform then outlines the proposed three-pillar design and the rationale behind the design choices. It then moves on to examine financing options. The text continues by discussing institutional reform issues, and the final section concludes. The six appendixes provide additional analytical detail supporting the findings in the main text. The pension system design can play an important role in supporting or constraining such economic and demographic transitions: 1) fragmentation and lack of portability of rights hinder labor market efficiency and contribute to coverage gaps; 2) multiple schemes for salaried workers, civil servants, and, in some areas, migrants similarly impact labor markets; 3) legacy costs that are largely financed through current pension contributions weaken incentives for compliance and accurate wage reporting; 4) very limited risk pooling and interurban resource transfers limit the insurance function of the urban pension system and create spatial disparities in old-age income protection; 5) low retirement ages affect incentives and benefits and undermine fiscal sustainability; and 6) relatively low returns on individual accounts result in replacement rates significantly less than anticipated while at the macro level, are likely to inhibit wider efforts to stimulate higher domestic consumption.en-USCC BY 3.0 IGOACCOUNTINGACCOUNTING FRAMEWORKACTUARIESAGE SUPPORTANNUITIESANNUITYBANK DEPOSITSBANKRUPTCYBARRIERBASIC BENEFITBENEFICIARIESBENEFICIARYBENEFIT ADJUSTMENTBENEFIT ADJUSTMENTSBENEFIT FORMULABENEFIT LEVELBENEFIT LEVELSBUSINESS DEVELOPMENTBUYBACKCASH FLOWCENTRAL GOVERNMENT FINANCINGCONFLICTS OF INTERESTCONSUMER PRICE INDEXCONTRACTUAL SAVINGSCONTRIBUTION RATECONTRIBUTION RATESCREDIBILITYDEBT RELIEFDEFICITSDEFINED BENEFITDEFINED-CONTRIBUTION PENSIONDEMOGRAPHICDEMOGRAPHIC CHANGEDEPENDENCY RATIODEPENDENCY RATIOSDEPOSITSDEVELOPING COUNTRIESDISBURSEMENTDISBURSEMENTSECONOMIC REFORMECONOMICSELDERLYEMPLOYEEEMPLOYEE BENEFITSEMPLOYMENTEXPENDITURESFAMILY SUPPORTFERTILITYFERTILITY RATEFINANCIAL ASSETFINANCIAL FLOWSFINANCIAL MARKETFINANCIAL MARKET DEVELOPMENTFINANCIAL SERVICESFINANCIAL SUSTAINABILITYFINANCING ARRANGEMENTSFISCAL BURDENFISCAL CAPACITYFISCAL CONSTRAINTSFUNDED PENSIONFUTURE PENSIONGLOBALIZATIONGOVERNMENT REVENUESGOVERNMENT SUBSIDIESGROSS DOMESTIC PRODUCTHOUSEHOLD INCOMEHOUSEHOLD SAVINGSHUMAN CAPITALHUMAN DEVELOPMENTHUMAN RESOURCESIMPLICIT PENSION DEBTIMPLICIT TAXINCOME GROUPSINCOME INEQUALITYINCOME SECURITYINCOMESINDIVIDUAL ACCOUNTINDIVIDUAL ACCOUNTSINFLATION RATEINFORMAL SECTORINFORMAL SECTORSINFORMATION FLOWSINSTITUTIONAL ARCHITECTUREINSTITUTIONAL CAPACITYINSTITUTIONAL INFRASTRUCTUREINSTRUMENTINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL LABOUR ORGANIZATIONINVESTINGINVESTMENT MANAGEMENTINVESTMENT RISKSJOB CREATIONLABOR ECONOMICSLABOR FORCELABOR FORCE PARTICIPATIONLABOR INCOMELABOR MARKETLABOR MARKETSLABOR MOBILITYLABOR SUPPLYLABOURLIFE EXPECTANCYLIQUIDITYLOCAL FINANCESLOCAL FISCAL CAPACITYLOCAL GOVERNMENTLOCAL GOVERNMENTSMANDATORY SCHEMEMARKET DISTORTIONSMARKET EFFICIENCYMARKET INTERMEDIARIESMARKET REFORMMARKET RETURNSMINIMUM BENEFITMINIMUM BENEFIT GUARANTEEMINIMUM INCOMEMONETARY FUNDNATIONAL DEVELOPMENTNATIONAL PENSIONNOTIONAL ACCOUNTNOTIONAL ACCOUNTSOCCUPATIONAL RETIREMENTOCCUPATIONAL SCHEMESOLD-AGE INCOMEOLD-AGE PENSIONOLDER PEOPLEOWNERSHIP STRUCTUREPENSIONPENSION ADMINISTRATIONPENSION ARRANGEMENTSPENSION ASSETPENSION BENEFITPENSION BENEFITSPENSION CONTRIBUTIONSPENSION COSTSPENSION COVERAGEPENSION DEBTPENSION ENTITLEMENTSPENSION FINANCINGPENSION FRAMEWORKPENSION INCOMEPENSION INDICATORSPENSION LIABILITIESPENSION PLANPENSION POLICYPENSION POLICY REFORMPENSION PROGRAMSPENSION PROVISIONPENSION PROVISIONSPENSION REFORMPENSION REFORMSPENSION RIGHTSPENSION SAVINGSPENSION SCHEMEPENSION SCHEMESPENSION SYSTEMPENSIONSPERFORMANCE RISKPERSONAL PENSIONPERSONAL PENSIONSPRIVATE EMPLOYERPUBLIC POLICYRAPID GROWTHRATE OF RETURNRATES OF INFLATIONRATES OF RETURNREFORM PROGRAMREGULATORY FRAMEWORKREMITTANCEREPLACEMENT RATEREPLACEMENT RATESRESERVERESERVE FUNDSRESERVESRETIREERETIREESRETIREMENTRETIREMENT ACCOUNTSRETIREMENT AGERETIREMENT AGESRETIREMENT BENEFITRETIREMENT INCENTIVESRETIREMENT INCOMERETIREMENT SAVINGSRETIREMENT SAVINGS ACCOUNTRETURNSRISK MANAGEMENTRISK POOLINGSAVINGS RATESSECURITIESSERVANTSSMALL ENTERPRISESSOCIAL ASSISTANCESOCIAL INSURANCESOCIAL PENSIONSOCIAL PENSIONSSOCIAL POLICYSOCIAL PROTECTIONSOCIAL SECURITYSOCIAL SECURITY REFORMSOCIAL SECURITY SYSTEMSOCIAL SECURITY SYSTEMSSOCIAL SERVICESSUPERVISORY FRAMEWORKSUPPLEMENTAL BENEFITSUPPLEMENTARY PENSIONSUSTAINABLE DEVELOPMENTTAXTAX COLLECTIONTAX TREATMENTTERM DEPOSITSTRANSPARENCYTRUSTEEURBANIZATIONVOLUNTARY PENSIONVOLUNTARY PENSIONSWAGE GROWTHWorld Bank10.1596/978-0-8213-9540-0