China’s three-prong pension system consists of the basic pension paid by the government, those paid by private firms and commercially sold retirement plans.
China’s three-prong pension system consists of the basic pension paid by the government, those paid by private firms and commercially sold retirement plans. According to the Ministry of Human Resources and Social Security, the basic pension framework, featuring wide coverage and low security, covered 915 million people in both urban and rural areas, and company pension plans covered 23.3 million private-sector employees by the end of 2017. In recent years, however, the gap between revenue and expenditure in the basic pension system has become wider, while company pension plans still have a limited role. Encouraging commercial pension plans is important to improve China’s multi-level pension system, deal with the issue of the aging population and promote social stability. It is urgent to tighten supervision, prevent investment traps and offer more products to meet the demands of the market.
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