The old-age pension insurance aims at providing people who retire from working life with income during their retirement.
In general, pension provision for old-age is built on three pillars:
- Social insurance pension schemes, financed from contributions made by both employers and employees plus frequently subsidies from general tax revenue, with entitlement determined by the duration or amount of contribution payments or periods of employment of each individual,
- Company pension schemes (enterprise annuities in China) which provide pensions to former employees of the company based on contributions paid by the employer and frequently also by the employees,
- Individual (private) pension schemes which are offered by private insurance companies and are paid for by individuals who intend to prepare a supplementary income for their retirement or add up to the general pension funds’ benefits.
The three pillars may be buttressed by a system of social assistance to guarantee a minimum level of income to retired persons.
Among current issues in China in the field of old age provision are coverage, the financing of old age pension provision in the light of demographic factors, including funding of individual pension accounts, the introduction of universal pension coverage for rural and migrant workers (including provision for farmers whose land has been requisitioned), and portability of accrued pension rights.
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