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Does Reduction of Contribution Rate Affect the Sustainability of China’s Basic Endowment Insurance Fund?—Based on the Background of National Pooling and Collection Responsibility Transformation

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  • Pengjun Chen

    (School of Economics and Finance, Huaqiao University, Quanzhou 362021, China)

  • Lunhui Shang

    (School of Economics and Finance, Huaqiao University, Quanzhou 362021, China)

Abstract

Sustainability is an urgent issue in the basic endowment insurance system in China. The advancement of the national pooling and the transfer of collection responsibility from the social security department to the taxation department are the policy measures taken to ensure the sustainable development of the endowment insurance system. In this circumstance, this paper discusses the solvency of the national pooling account fund of basic endowment insurance when the enterprise contribution rate drops to 16% by constructing an improved theoretical actuarial model. The conclusion shows that under the national pooling mode of peeling off historical debt and personal account, even if the contribution rate drops to 16%, the basic endowment insurance fund in China will still have strong solvency in the long run. In addition, due to the transfer of the collection responsibility of the basic endowment insurance, the proportion of the actual number of payers to the number of in-service insured will gradually increase to 100%, and the calculation results in this paper show that the bankruptcy scope of China’s basic pension insurance funds will be postponed to the year of 2113. This study enriches the relevant literature and solves a policy concern in the reform of China’s basic endowment insurance system: Does reduction of contribution rate affect the sustainability of the basic endowment insurance system?

Suggested Citation

  • Pengjun Chen & Lunhui Shang, 2021. "Does Reduction of Contribution Rate Affect the Sustainability of China’s Basic Endowment Insurance Fund?—Based on the Background of National Pooling and Collection Responsibility Transformation," Sustainability, MDPI, vol. 13(16), pages 1-13, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:8757-:d:609005
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