Streamlining Pension Contributions in the People's Republic of China ; ADB Observations and Suggestions ; No. 2020-01

Abstract

The current pension contribution system in the People's Republic of China faces two main challenges: determining the pension contribution base and setting the pension contribution rates. Although the government has adopted important reforms, including lowering the employer pension contribution in March 2019, further actions are needed. This policy note suggests the following measures: (i) consolidate the contribution base while stabilizing the level of government subsidies to the basic pension; (ii) reform the method for determining the contribution base and achieve national pooling; and (iii) establish an interagency information exchange network.