A Comparison of Reform Proposals for the Individual Accounts in the Basic Pension Scheme for Employees
In cases where insured employees under the basic pension scheme for employees have remaining balances in their individual accounts upon their death,the remaining balance is inheritable.Insured employees who are still alive with exhausted balances in their individual accounts can continue to receive individual account benefits until their passing.These two scenarios lead to a funding gap in the individual account.The low number of months for benefit distribution,low investment returns on individual accounts,and high accounting interest rates exacerbate the fund's income and expenditure gap.This article simulates four reform proposals for individual accounts and compares the advantages and disadvantages of each.The research reveals that:(1)under Proposal One,which involves only abolishing the inheritance provision,or under Proposal Two,which excludes inheritance and adjusts the benefit distribution months based on the average remaining life after retirement,the inheritance gap is significantly smaller than the longevity gap,making it unfeasible for individual accounts to achieve fund balance;(2)if the inheritance provision is abolished,the number of benefit distribution months required to eliminate the funding gap in the individual account exceeds the number that can be paid until the average remaining life after retirement;(3)both under Proposal Three,which includes inheritance and the discontinuation of individual account pensions after the actual balance of individual accounts is exhausted,and Proposal Four,which adjusts the number of benefit distribution months based on the maximum age,a balance of individual account funds can be achieved.However,under Proposal Three,the pension replacement rate significantly drops for long-lived insured employees after the individual account balance is depleted,while Proposal Four spreads the impact of reduced benefits throughout the entire benefit period.Reform proposals for individual accounts require a trade-off between inheritance provisions,fund balance,and pension replacement rates.The findings of this study are also relevant to the reform of individual accounts in basic pension insurance schemes for government institutions,public service units,and urban and rural residents.
万方数据
维普
