Leaving Money on the Table? Suboptimal Enrollment in the New Social Pension Program in China

Xi Chen, Lipeng Hu and Jody L. Sindelar

No 24065, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: China’s recently implemented New Rural Pension Scheme (NRPS), the largest social pension program in the world, was designed to provide financial protection for its rural population and reduce economic inequities. Yet the impact of this program is mitigated if those eligible fail to enroll. This paper examines the extent to which pension-eligible individuals, and their families, make optimal pension decisions. Families are involved in the NRPS decisions because, in most cases, adult children need to enroll as a prerequisite of their parents’ receipt of benefits. We examine the decisions of both those eligible for pension benefits (i.e. over 60 years old) and their adult children. We use the rural sample of the 2012 China Family Panel Study to study determinants of the decision to enroll in NRPS, premiums paid, and time taken to enroll. We find evidence of low and suboptimal pension enrollment by eligible individuals and their families. Suboptimal enrollment takes various forms including failure to switch from the dominated default pension program to NRPS and little evidence that families make mutually beneficial intra-family decisions. For the older cohort, few individual and family characteristics are significant in enrollment decisions, but village characteristics play an important role. For the younger cohort, we find that more individual-level characteristics are significant, including own and children’s education. Village characteristics are important but not as much as for the older cohort.

JEL-codes: D13 D14 D15 H55 I3 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-age, nep-cna and nep-tra
Note: AG DEV EH PE
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Citations: View citations in EconPapers (3)

Published as Xi Chen & Lipeng Hu & Jody Sindelar, 2019. "Leaving Money on the Table? Suboptimal Enrollment in the New Social Pension Program in China," The Journal of the Economics of Ageing, .

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Journal Article: Leaving money on the table? Suboptimal enrollment in the new social pension program in China (2020)
Working Paper: Leaving Money on the Table? Suboptimal Enrollment in the New Social Pension Program in China (2019)
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