Assessing the Sustainability of China’s Basic Pension Funding for Urban and Rural Residents

Abstract

This paper uses an actuarial model to evaluate the effect of poverty alleviation policy on the sustainability of China’s basic pension funding for urban and rural residents (BPFUUR). Because of the poverty alleviation policy, China’s basic endowment insurance for urban and rural residents (BEIURR) has been given the responsibility of helping the poor through insurance and by increasing the income of the elderly. On the basis of summarizing the current situation of BEIURR, this paper simulated and predicted the impact of poverty alleviation policy on the short term (2020–2025) and medium term (2025–2050) sustainability of China’s BPFUUR. The results show that: (1) The sustainability of the fund will inevitably face challenges; (2) The per capita contribution level will be at a low level for a long time; (3) The birth tide brought by the two-child policy has a positive impact on the medium-term sustainability of the fund; (4) Poverty eradication mainly affects the short-term current deficit, but not the medium-term accumulated deficit; (5) The higher the payment, the better the sustainability of the funding in the short and medium term. According to the above results, this paper puts forward some countermeasures, such as insisting on family planning, optimizing the adjustment system for basic pension funds, and improving the treatment of basic pensions.