1. Ministry of Labor and Social Security P.R.China
Meeting of Directors of Social Security Organizations
in Asia and the Pacific
China’s old-age insurance:
background, challenges and proposed measures
Pi Dehai
Ministry of Labor and Social Security P.R.China
2019/1/18

2. Contents of the Presentation
Background
Challenges and opportunities for China’s old-age insurance development
Proposed measures
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3. 1.Background
In early 1950’s, China put in place an old-age insurance system compatible with the productivity level and economic system. Since 1980’s, the Government has made great efforts to reform the old-age insurance system, aiming at building one compatible with the socialist market economic system.
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4. 1.Background old-age insurance for state organs and institutions
Now China’s old-age insurance system consists of three parts:
urban enterprise old-age insurance
old-age insurance for state organs
and institutions
old-age insurance for rural areas
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5. 1.Background Enterprise go entirely to their individual accounts
Part of the contributions is used to set up social pooling fund
Enterprise
20%
Part of the contributions goes to the individual accounts
Contribution
go entirely to their individual accounts
employee 8%
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6. 1.Background Basic: 1/120 of the accumulation in the account
20% of the workers’ average wages in respective localities in the previous year
Basic:
Pension
1/120 of the accumulation in the account
Individual account
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7. 1.Background
After 20 years of exploration, great achievements have been made.
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8. 1.Background
Adopting the old-age insurance model 1.
10 years ago, China replaced the pay-as-you-go under the basic old-age insurance with a partial funding by combining social pooling with individual
accounts.
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9. 1.Background 2. Expanding the coverage
The basic old-age insurance is applicable to all urban enterprises, self-employed and people in flexible employment.
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10. 1.Background 3. Establishing new funding mechanism
  Costs are shared by multiple parties.
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11. 1.Background
Promoting socialized management 4.
Since 2000, entrusted banks and post offices pay old-age pensions to the retirees. Since 2002, greater efforts have been given to socialized management of the retired.
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12. 1.Background 5. Establishing a multi-layer system
  In addition to participating in the compulsory basic old-age insurance, enterprises with suitable conditions may set up annuities for their employees. In addition, the state also encourages personal savings for old age.
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13. 1.Background 6. Streamlining social security management
  In March 1998, the Ministry of Labor and Social Security was established.
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14. 1.Background 7. Undertaking experimental reforms
  In 2001, the Chinese Government began to carry out pilot project of injecting funds into individual accounts in Liaoning Province. The pilot project was expanded to Jilin and Heilongjiang provinces in 2004.
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15. 2. Challenges and opportunities
Population ageing
Urbanization
Diversified forms of employment
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16. 2. Challenges and opportunities
Population ageing
The ratio between the workers paying contributions and the pensioners decreased from 5:1 in 1992 to 3:1 in It is projected that in 2020 the urban dependency ratio will become 2.5:1.
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17. 2. Challenges and opportunities
Urbanization
It is estimated that in 20 year’s time, China’s urbanization rate will rise from 40% to 60%.
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18. 2. Challenges and opportunities
Diversified forms of employment
Along with the economic structure adjustment, deepening of enterprise reform and the change in economic ownership, a new employment pattern has taken shape.
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19. 2. Challenges and opportunities
The government attaches high importance to the issue
The economy continues to develop
There are social consensus and expectation from the public
Intensified international exchange and cooperation continues
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20. 3. proposed measures Injecting funds into individual accounts.
                                                                                            
Injecting funds into individual accounts.
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21. 3. proposed measures
Broadening the investment channels to preserve and increase the value of the funds.
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22. Expanding the old-age insurance coverage.
3. proposed measures
Expanding the old-age insurance coverage.
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23. 3. proposed measures
Improving the formula for the basic old-age pension to form an incentive mechanism
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24. 3. proposed measures
Strengthening the fund regulation by raising pooling level
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25. Perfecting multi-layer old-age insurance system
3. proposed measures
Perfecting multi-layer old-age insurance system
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26. 3. proposed measures
Reforming the old-age insurance system for state organs and institutions
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27. 3. proposed measures
Strengthening legal construction and management of old-age insurance.
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28. Thank You!
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