The Misunderstanding of Social Insurance: The Inadequacy of the Basic Pension Insurance for Urban Employees (BPIUE) for the Aging Population of China

Naijun Hu
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Naijun Hu: School of Public Policy and Management, University of Chinese Academy of Science, Beijing 100049, China

Social Sciences, 2018, vol. 7, issue 5, 1-16

Abstract: The Chinese public has shown increasing concern about the “inadequacy” of the funds available for the Basic Pension Insurance for Urban Employees (BPIUE). The government has managed the issue by balancing the program’s revenue and expenditures each year and by increasing subsidies for it from all levels. These actions have raised a number of questions, such as why the program still needs financial subsidies as the fund’s balance continues to increase. The BPIUE was initiated in 1991, and the combination model of “social pooling” and “individual accounts of employees” was established in 1995 and formally launched in 1998. Also, in 1998, reforms including the downsizing of state-owned enterprises were implemented, and tens of millions of employees of state-owned enterprises entered early retirement. Local governments used funds from the individual accounts to pay pensions to employees based on length of service, and as a result, the individual accounts have remained empty ever since. Based on the definition of social insurance and an empirical analysis of the BPIUE fund, this paper conducts a qualitative and quantitative analysis of the plan from two perspectives, striving to provide an objective explanation and assessment of the pension fund’s inadequacy. On this basis, the paper analyzes the impact of the aging population of China on the existing and future BPIUE fund gap.

Keywords: aging; social insurance; financial inadequacy (search for similar items in EconPapers)
JEL-codes: A B N P Y80 Z00 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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