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The Oxford Companion to the Economics of China$
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Shenggen Fan, Ravi Kanbur, Shang-Jin Wei, and Xiaobo Zhang

Print publication date: 2014

Print ISBN-13: 9780199678204

Published to Oxford Scholarship Online: December 2014

DOI: 10.1093/acprof:oso/9780199678204.001.0001

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The urban pension system

The urban pension system

Chapter:
(p.243) 38 The urban pension system
Source:
The Oxford Companion to the Economics of China
Author(s):

Zheng Song

Kjetil Storesletten

Yikai Wang

Fabrizio Zilibotti

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199678204.003.0039

This chapter examines China’s pension reform. China implemented a public pension system in the early 1990s. The system consists of two pillars. The first pillar, funded by 17 per cent wage taxes paid by enterprises, guarantees a replacement rate of 20 per cent of local average wage for retirees with a minimum of fifteen years of contribution. The second pillar provides pensions from individual accounts financed by a contribution of 3 per cent and 8 per cent wage taxes paid by enterprises and workers, respectively. More recently, a new reform was implemented, which adjusted the proportion of taxes paid by enterprises and individuals and the proportion of contribution for individual accounts. Individual accounts are now funded by a wage tax of 8 per cent paid by workers only. The rural pension system is also discussed.

Keywords:   social security, pensions, retirement income, pension reform, wage taxes, rural pensions

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