China’s retirement income system comprises an urban system and a rural social system as well as systems for rural migrants and public sector workers. The urban and rural systems have a pay-as-you-go basic pension consisting of a pooled account (from employer contributions or fiscal expenditure) and funded individual accounts (from employee contributions). Supplementary plans are also provided by some employers, more so in urban areas.
The overall index value for the Chinese system could be increased by:
- continuing to increase the coverage of workers in pension systems
- introducing a requirement that part of the supplementary retirement benefit must be taken as an income stream
- increasing the state pension age over time
- offering more investment options to members and thereby permitting a greater exposure to growth assets
- improving the level of communication required from pension plans to members
The Chinese index value fell from 49.0 in 2014 to 48.0 in 2015 primarily due to the increase in life expectancy.