MODELING A FLEXIBLE RETIREMENT AGE TO NARROW PENSION GAP: THE CASE OF CHINA

Yali Liu, Meiying Yang (), Haitao Zheng, Yunyun Jiang () and Dongfang Gu ()
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Yali Liu: Center for Science and Technology Metrics, Institute of Scientific and Technical Information of China, No. 15, Fuxing Road, Haidian District, Beijing 100038, P. R. China†School of Economics and Management, Beihang University, No. 37, Xueyuan Road, Haidian District, Beijing 100083, P. R. China
Meiying Yang: ��School of Economics and Management, Beihang University, No. 37, Xueyuan Road, Haidian District, Beijing 100083, P. R. China
Haitao Zheng: ��School of Economics and Management, Beihang University, No. 37, Xueyuan Road, Haidian District, Beijing 100083, P. R. China
Yunyun Jiang: ��School of Economics, Peking University, No. 5, Summer Palace Road, Haidian District, Beijing 100871, P. R. China
Dongfang Gu: ��School of Economics and Management, Beihang University, No. 37, Xueyuan Road, Haidian District, Beijing 100083, P. R. China

The Singapore Economic Review (SER), 2021, vol. 66, issue 06, 1665-1685

Abstract: With the relatively fixed retirement age, the dramatic increase in life expectancy and the sharp decline in fertility have caused a serious aging problem and an unsustainable pension crisis. It is therefore necessary to design flexible retirement benefits rules that consider life expectancy. By introducing the lifetime utility optimization model, the closed-form solution for the flexible retirement age is obtained. Pension benefits incentive strategies are constructed to encourage contributors to choose a retirement age that is beneficial toward narrowing the pension gap. The empirical studies show that China will face a serious pension gap in the future if the current statutory retirement age is not adjusted. If the retirement age is delayed according to life expectancy, the future pension gap will be greatly reduced.

Keywords: Flexible retirement age; life expectancy; pension gap; incentive strategy; China (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S0217590818420079

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