From Status-Based Privilege to Old Age Security: Rethinking Public Pension Reform in China

UMKC Law Review, Volume 82, Number 4, Summer 2014

62 Pages Posted: 28 Dec 2014

See all articles by Qian Hao

Qian Hao

China University of Political Science and Law

Date Written: September 1, 2013

Abstract

Pension reform poses a formidable challenge to China’s development and has become a topic of intensive debate in recent years. Nonetheless, various reform measures based on legislations adopted since the 1980s have largely failed to be implemented, including the 1997 three-pillar pension plan. While the current debate on pension reform in China centers on how to address the financial crisis of the public pension system, this article argues that widening pension deficit has been only a symptom rather than the root cause of the reform stalemate. China’s old socialist pension benefits were developed as a status-based privilege rather than provision of old age economic security. As China transits from a centrally planned economy to a market economy, the old pension system has increasingly become inadequate and inequitable. The remaining socialist pension obligations are incompatible with the emerging market, and the majority of the population is exposed to market risks without protection in retirement. However, those structural challenges have not been successfully addressed by deficit-driven reform plans or short-sighted measures that focus on having current workers pay for the heavy cost of pensions for retirees under the previous system. The right reform strategy will require that efforts be redirected towards addressing the fundamental transition issues.

Keywords: China, public pension reform, old age security, SOE reform

Suggested Citation

Hao, Qian, From Status-Based Privilege to Old Age Security: Rethinking Public Pension Reform in China (September 1, 2013). UMKC Law Review, Volume 82, Number 4, Summer 2014, Available at SSRN: https://ssrn.com/abstract=2543043

Qian Hao (Contact Author)

China University of Political Science and Law ( email )

25 Xitucheng Rd
Haidian District
Beijing
China

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