Financial Imbalance Risk and Its Control Strategy of China’s Pension Insurance Contribution Rate Reduction

Within the context of China’s Urban Employees’ Basic Pension Insurance (UEBPI), this paper constructs an actuarial model to analyze the financial imbalance risk of contribution rate reduction and to investigate the possibility of further reducing the contribution rate. It is found that the UEBPI fun...

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Bibliographic Details
Published in:Mathematical problems in engineering 2021, Vol.2021, p.1-12
Main Authors: Jing, Peng, Chang, Cai, Zhu, Heng, Hu, Qiuming
Format: Article
Language:English
Subjects:
Aging
Cash flow
Cost control
Employers
Employment
Expenditures
Fertility
Growth rate
Human capital
Insurance
Mandatory retirement
Pension funds
Reforms
Retirement
Risk management
Social security
Strategy
Sustainable development
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Summary:Within the context of China’s Urban Employees’ Basic Pension Insurance (UEBPI), this paper constructs an actuarial model to analyze the financial imbalance risk of contribution rate reduction and to investigate the possibility of further reducing the contribution rate. It is found that the UEBPI fund would show financial imbalance risk in 2024 if the contribution rate is 16%, and no control strategy is introduced. In the case of single strategy (the collection system reform, delay of retirement age, or the introduction of external finance), the financial sustainability of the UEBPI fund could be improved to some extent, whereas the financial imbalance risk remains huge. In the case of a package of control strategies being implemented, the UEBPI fund could be able to continue its operation until 2060, and the contribution rate can be further reduced by 0–4 percentage. Therefore, the implementation of a package of control strategies presents a prerequisite for controlling the financial imbalance risk and further reducing the contribution rate.
ISSN:1024-123X
1563-5147
DOI:10.1155/2021/5558757