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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

(p.243) 38 The urban pension system
The Oxford Companion to the Economics of China

Zheng Song

Kjetil Storesletten

Yikai Wang

Fabrizio Zilibotti

Oxford University Press

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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