The Impact of Fiscal Subsidies on the Sustainability of China’s Rural Pension Program

Lin, Benxi; Zhang, Yu Yvette

doi:10.3390/su12010186

Cited by 4 publications

(6 citation statements)

References 13 publications

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“…The issues of aging population, poverty and participation behavior of pension plans are prevalent in many rural areas, especially in some developing countries (Lin and Zhang, 2019). Scholars and policy makers recognize the effect after implementing the NRPP .…”

Section: Literature Reviewmentioning

confidence: 99%

“…Families with higher income levels will pay more for the NRRP. In this regard, the burden of family pension and the pressure of education expenditure also restrict the probability of participating in the NRRP and contribution plans (Lin et al, 2018;Lin and Zhang, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

“…100 yuan) among the five levels of the NRPP (100-500 yuan). In fact, as the higher the amount of the contribution payment, the more pension benefits will be obtained in the future (Lin and Zhang, 2019); rural residents seem to have not made an optimal choice.…”

Section: Introductionmentioning

confidence: 99%

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Effect of household's financial literacy on pension decision making: evidence from China's new rural pension program

Ali²,

Yang³

et al. 2022

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PurposeChina's New Rural Pension Program (NRPP) has been implemented for a decade, but the factors that facilitate rural residents' participation have received little attention. This study aims to investigate whether financial literacy has an influence on rural residents' behavior of participation in the NRPP. In particular, this study further verifies if high financial literacy is important and whether financial education can enhance the impact of financial literacy on current, long-term and dynamic pension decisions of rural households.Design/methodology/approachThis study investigates the impact of financial literacy on rural residents' participation in China's NRPP using the China Household Financial Survey (CHFS) Data of 2015 and 2017. This study constructs an analytical framework for current, long-term and dynamic impacts and comprehensively analyzes the value of financial literacy in the decision making of the NRPP. This study uses the instrumental variable method to solve the possible endogeneity problem. In addition, the authors also demonstrate the positive role of high financial literacy in household pension decisions. Further analysis reveals gender and regional heterogeneity in the impact of financial literacy on pension decisions. The moderating effect model explores whether financial education has a significant moderating effect on financial literacy and pension decision making of the NRPP.FindingsFinancial literacy can improve the participation behavior of households in rural areas (dynamic effect) and promote their current and long-term participation in the NRPP, choosing a higher pension contribution level in the NRPP. However, financial literacy has no significant effect on the change in the contribution amount of the NRPP. Further research finds that high financial literacy has comparative advantages in household pension decision making in rural areas. There are gender and regional differences in the impact of financial literacy on pension decisions. In addition, effective financial literacy education enhances the current, long-term and dynamic impacts of residents' financial literacy on NRPP participation and pension contributions.Practical implicationsThis study comprehensively considers the impact of financial literacy on pension decision making behavior from three aspects: current, long-term and dynamic, making up for the dearth in the existing literature that only focuses on the impact of financial literacy on current financial behaviors and bridging the gap between the theoretical framework and experimental results. Our study proposes new policy implications: (1) Governments and financial institutions should pay attention to financial literacy and education levels in rural areas and carry out financial education and training programs to increase social welfare levels by increasing rural residents' participation and pension contribution. (2) The community can strengthen the policy advocacy of the NRPP and make people develop a stronger sense of trust toward it. The government can also subsidize individual accounts through financial support.Originality/valueThis study comprehensively considers the impact of financial literacy on pension decision-making behavior from three aspects: current, long-term and dynamic, making up for the dearth in the existing literature that only focuses on the impact of financial literacy on current financial behaviors and bridging the gap between the theoretical framework and experimental results. Our study proposes new policy implications: (1) Governments and financial institutions should pay attention to financial literacy and education levels in rural areas and carry out financial education and training programs to increase social welfare levels by increasing rural residents' participation and pension contribution. (2) The community can strengthen the policy advocacy of the NRPP and make people develop a stronger sense of trust toward it. The government can also subsidize individual accounts through financial support.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Effect of household's financial literacy on pension decision making: evidence from China's new rural pension program

Ali²,

Yang³

et al. 2022

View full text Add to dashboard Cite

show abstract

“…By the end of 2021, the NRPS participation rate exceeds 91% nationwide, and rural residents account for more than 90% [7]. The implementation of NPRS has been effective in alleviating health opportunity inequalities between urban and rural elderly [7], improving the quality of retirement for rural elderly [8], and improving the well-being of rural elderly [9,10]. However, most participants selected the lowest all annual contribution level [9,10], which may limit the extent of NPRS in improving life quality of rural elderly [11][12][13], which is an important issue in the Chinese economy [14].…”

Section: Introductionmentioning

confidence: 99%

The Role of Trust in Government in China’s Rural Pension Program

Lin¹,

Li²,

Zhang³

et al. 2022

Preprint

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This paper estimates the effect of trust in government on rural residents’ contributions in China’s rural pension program using the Propensity Score Matching (PSM) method. We construct an analytical framework for rural residents' decision-making in pension program and provide analysis using data from China Family Panel Studies (CFPS) and 25 provincial Departments of the Human Resources and Social Security (DOHRSS) in China. Our analysis shows that rural residents’ trust in government will influence their contributions to the pension programs by affecting their expected return of the investments. Our results suggest that the government should improve rural residents’ trust in government in order to develop a successful and sustainable rural pension program.

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“…The budget balance of the basic endowment insurance fund has been the focus of academic attention for a long time. Up to now, there have been lots of relevant researches in academic fields, when Lin and Zhang studied the sustainability of financial subsidies to pensions, they found that financial subsidies of pension insurance can significantly increase the participation rate and individual contributions, thereby improving the solvency of the fund [3]. While few studies combining the contribution rate, collection responsibility transformation, and the solvency of pension fund.…”

Section: Introductionmentioning

confidence: 99%

Does Reduction of Contribution Rate Affect the Sustainability of China’s Basic Endowment Insurance Fund?—Based on the Background of National Pooling and Collection Responsibility Transformation

Peng-jun

Shang

2021

Sustainability

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Sustainability is an urgent issue in the basic endowment insurance system in China. The advancement of the national pooling and the transfer of collection responsibility from the social security department to the taxation department are the policy measures taken to ensure the sustainable development of the endowment insurance system. In this circumstance, this paper discusses the solvency of the national pooling account fund of basic endowment insurance when the enterprise contribution rate drops to 16% by constructing an improved theoretical actuarial model. The conclusion shows that under the national pooling mode of peeling off historical debt and personal account, even if the contribution rate drops to 16%, the basic endowment insurance fund in China will still have strong solvency in the long run. In addition, due to the transfer of the collection responsibility of the basic endowment insurance, the proportion of the actual number of payers to the number of in-service insured will gradually increase to 100%, and the calculation results in this paper show that the bankruptcy scope of China’s basic pension insurance funds will be postponed to the year of 2113. This study enriches the relevant literature and solves a policy concern in the reform of China’s basic endowment insurance system: Does reduction of contribution rate affect the sustainability of the basic endowment insurance system?

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The Impact of Fiscal Subsidies on the Sustainability of China’s Rural Pension Program

Cited by 4 publications

References 13 publications

Effect of household's financial literacy on pension decision making: evidence from China's new rural pension program

Effect of household's financial literacy on pension decision making: evidence from China's new rural pension program

The Role of Trust in Government in China’s Rural Pension Program

Does Reduction of Contribution Rate Affect the Sustainability of China’s Basic Endowment Insurance Fund?—Based on the Background of National Pooling and Collection Responsibility Transformation

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