Stochastically Assessing the Financial Sustainability of Individual Accounts in the Urban Enterprise Employees’ Pension Plan in China

Abstract

Various countries are paying increasing attention to the long-term financial sustainability of pension plans, and the self-balancing ability of such plans is an important index to measure their long-term financial sustainability. This paper explores the financial self-balancing ability of the individual accounts of China’s urban enterprise employees’ pension plan (UEEPPI). In the particularly serious scenario that the individual accounts’ previous accumulated funds are zero, the bookkeeping rate and the investment return rate are considered as stochastic variables in the in-depth analysis of the self-balancing ability of individual accounts, and the effects of two different bookkeeping behaviors are compared. The results indicate that if the government adopts the fixed bookkeeping rate, the individual accounts have an excellent self-balancing ability. If the government adopts a stochastic bookkeeping rate, it can further improve the self-balancing ability of individual accounts. Sensitivity analysis finds that the increase in the wage growth rate can improve the self-balancing ability of individual accounts, but the impact of contribution rate of individual accounts and the contribution wages of recruits create uncertainty. Based on the conclusions, some policy implications are proposed.

The Influence of Socio-Demographic Factors on Financial Sustainability of Public Services: A Comparative Analysis in Regional Governments and Local Governments

“…Moreover, some studies have brought out that dependent population is inversely associated with government revenue and directly associated with public expenditures, thus influence negatively on fiscal distress [50], on financial capacity [51] and on budget balance [46], since it influences on the pension payment pressure [12]. So, the dependent population affects two dimensions of financial sustainability (revenues and expenditures).…”

“…Under this background, although the concept of sustainability covers three dimensions (environmental, social and economic) [7], the financial sustainability becomes a key dimension in the management of governmental organizations in many parts of the world [8][9][10][11][12]. In this sense, governments, at any level (local, regional and state), are called to play a key role in promoting sustainable development, through environmental, economic and social policies based on the financial sustainability of public services [13,14].…”

Will Ending the One-Child Policy and Raising the Retirement Age Enhance the Sustainability of China’s Basic Pension System?

“…The findings suggest that a lower contribution rate motivates enterprises to participate in CBPS and increases the fund's revenue; ref. [21] explores the financial self-balancing ability of the individual accounts of China's urban enterprise employees' pension plan and indicates that the self-balancing ability of individual accounts will be improved if a stochastic bookkeeping rate is adopted; ref. [5] studies the effect of poverty alleviation policy on the sustainability of China's basic pension funding for urban and rural residents in the short term (2020-2025) and medium term (2025-2050) and suggests that the sustainability of the fund will inevitably face challenges.…”

Some Aspects of the Life-History Strategy of Pellonula Leonensis (Boulenger, 1916) (Teleostei: Clupeidae) in Qua Iboe Estuary, Nigeria

“…The contribution incomes C t of the individual account for basic pension insurance is equal to the old-age insurance premiums paid by the insureds themselves. According to the regulations of the State Council Document 26 in 1997, and referring to the methods of Yang and Shi [1], and Chen and Yang [4], the formula C t is…”

“…The financial sustainability of China"s basic pension insurance and its payment dilemma has always been the research focus of domestic scholars. Many scholars (e.g., Yang and Shi [1]; Tian and Zhao [2]; Zhao et al, [3]; Chen and Yang [4]; Chen [5]; etc.) believed that the sustainability of China"s basic pension insurance will face serious challenges, and there will be a large gap between pension income and pension expenditure.…”