摘要
In linewith advicefrom internationalfinancial institutions, China introduced a three-pillar pension system in 1997. However, it performs badly, with high contribution levels, the ‘funded’ contributionsbeing used forcurrent expenditures,and delaysinpension payments. The problemsareoften ascribed tothe remaining elements of pay-as-you-go (PAYG) present in thesystem. Thispaper, however, arguesthat the advantagesofa fully-funded system (FF) havebeen exaggerated. The higher relative return of the PAYG system in China justifies a PAYG pension system forChina. It is arguedthat theproblemsoftheChinesepension system are not caused by the use of PAYG butbytheneed to finance transition costs and conditions particularto the pension system in China, notablyincomplete contribution coverage, a low pension age, and a high replacement rate. Itisthesefactors, and therateofgrowth ofoutput, which determine the viabilityof theChinese pension system.
