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Inefficiency and Unfairness in China’s Pension System

by Danial
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Summary/Abstract

Inefficiencies and unfairness have marred the evolution of the pension scheme. The aim of this paper is to examine the various aspects of inefficiency and unfairness in China’s pension system as it develops. China’s commitment to create a partly financed pension scheme is regarded as a positive move towards the right direction. Replacements, the efficiency of the tacit pension debt, and changes in fund legislation and administration will not be sustainable if individual funds are not removed from social pooling.

The expansion of pension funds has always been a difficult job, particularly given the current state of commercial banking. However, there have been advantages of financial sector consolidation and development, which has culminated in improved productivity and liquidity. An successful pension scheme, according to this article, necessitates such pre-conditions as sound commercial banking, price stability, effective financial controls, and commercial insurance plans. In China’s viewpoint, the nation is currently undergoing a critical phase of economic and social change. The thorough overhaul of China’s social care and pension programs is a crucial strategic aspect that will help the country achieve long-term pension growth and a harmonious society. However, the new pension scheme is insufficient in promoting the achievement of the country’s sustainable growth goals, both now and in the future.

Key Words: Pension plan, Evaluation framework, China, social security

Introduction

Presently, china is at an important period with regard to its economic transition. The comprehensive reform of its social security, and pension  systems  is  a critical strategic factor that is  aimed towards  realizing a  sustainable  development  as  well as  an harmonious  society.  The  common  view  by  policy makers in  China  is that the current  approach to pension is inadequate  in  facilitating a realization of the  country’s economic  development objectives  now and  in the  future. According to these policy makers, a reformed pension system will see urban systems being sustainable, multilayered, protects at the basic level and has broad coverage. However, though the relevant authorities have placed the increasing premium on a more balanced development between urban, and rural areas, households and different regions, the pension  system has a per today  only contributed to  divergence (Bleakney, 2013, 78).

Inefficiency and Unfairness in China's Pension System

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