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Stochastic Forecast of the Financial Sustainability of Basic Pension in China

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  • Yuehong Tian

    (College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China
    School of Economics and Management, Henan Polytechnic University, Jiaozuo 454003, China)

  • Xianglian Zhao

    (College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China)

Abstract

The paper focuses on the stochastic forecast of the financial sustainability ofbasic pension, based on predictions for the population of China. The population was calculated iteratively by using Leslie matrix. An auto-regressive moving average model was adapted for the predictions of the fertility rates and the mortality rates. The Monte Carlo stochastic method was adapted for the projections of the dynamic process of the financial sustainability of the basic pension from 2013 to 2087 by 5000 times simulation. The forecasting results show that the imbalance of basic pension will occur in 2026. If the statutory retirement age is postponed by five years, the occurrence of the financial gap of the basic pension may be delayedby about 20 years, and the median deficit of basic pension will be reduced by about 64.25% in 2087.

Suggested Citation

  • Yuehong Tian & Xianglian Zhao, 2016. "Stochastic Forecast of the Financial Sustainability of Basic Pension in China," Sustainability, MDPI, vol. 8(1), pages 1-17, January.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:1:p:46-:d:62136
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    References listed on IDEAS

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    Cited by:

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    4. Mielczarek, Bożena & Zabawa, Jacek, 2021. "Modelling demographic changes using simulation: Supportive analyses for socioeconomic studies," Socio-Economic Planning Sciences, Elsevier, vol. 74(C).
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    6. Said Outlioua & Abdesselam Fazouane, 2023. "Which factors affect the sustainability of pension schemes?," Economic Affairs, Wiley Blackwell, vol. 43(1), pages 89-108, February.
    7. Elena V. Chistova, 2016. "Possibilities for Increasing the Retirement Age in Russia in Response to Population Ageing," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 12(3), pages 127-138.
    8. Yueqiang Zhao & Manying Bai & Yali Liu & Junzhang Hao, 2017. "Quantitative Analyses of Transition Pension Liabilities and Solvency Sustainability in China," Sustainability, MDPI, vol. 9(12), pages 1-16, December.
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