Stochastic Forecast of the Financial Sustainability of Basic Pension in China

Yuehong Tian and Xianglian Zhao
Additional contact information
Yuehong Tian: College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China
Xianglian Zhao: College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China

Sustainability, 2016, vol. 8, issue 1, 1-17

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.

Keywords: basic pension; financial sustainability; population; postponed retirement; contributions and expenditures; Monte Carlo stochastic simulation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://www.mdpi.com/2071-1050/8/1/46/pdf (application/pdf)
https://www.mdpi.com/2071-1050/8/1/46/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:8:y:2016:i:1:p:46-:d:62136

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().