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KMID : 1001320120390010109
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Social Welfare Policy
2012 Volume.39 No. 1 p.109 ~ p.132
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The Process and Issues of Chinese Pension Reforms
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Won Seok-Jo
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Abstract
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This paper aims to review Chinese pension reforms recently paid global attentions. For the purpose, the main background, the process, the major issues and proposed alternatives of the pension reforms were analysed. And on the basis of the analysis, a feasible alternative was proposed. The results are as follows; First, Chinese pension reforms were begun to support the state-owned enterprises(SOEs) and their employees, and the direction of reforms is from the labour union management system to the SOEs management system, and next to the government control system, and from the SOEs’ financial responsibility system to Beveridge system. Recently financial support of the central government is being increased step by step. Second, there are four major issues in the pension reforms, such as low level of coverage, financial deficit of the individual account, low investment profit, and fragmentation of the pension funds. All of these issues seems not to be overcome on short-term period. And proposed alternatives like full funding of the individual account and the nominal defined contribution(NDC) are unrealistic. Third, it needs fundamental intervention of central government for success of the pension reforms. The National Social Security Fund(NSSF) could be enlarged as a national pension management corporation which has nationwide branches. It will gather all contributions from firms and workers, give pensions to pensioners, and manage the funds. Long-term perspective on Chinese pension reforms is optimistic. The facts that Chinese pension system is relatively young, and Chinese financial potentiality is enough are the reason. When Chinese government keeps rational efforts, it’s sure that success of the pension reforms will be achieved.
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KEYWORD
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NDC, NSSF Chinese pension reforms, sustainability of pension system, two-tier system, individual account, NDC, NSSF
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