摘要
Since the mid-1990s, China has adopted a partially funded pension scheme in building itssocial security system. However, after nearly 10 years of operations, people found that theserious moral hazard problem of contribution defaults and loss of control concerningpension payment stemmed from this partially funded pension scheme. This institutionalarrangement has also resulted in the so-called adverse selection in non-market institutions,which in turn is capable of destroying the current system.This article argues for the introduction of the Notional Defined Contribution (NDC)scheme, because it can solve the problem of moral hazard and adverse selection. Moreover,it can solve the problem of a lack of institutional conditions for the entry of the social securityfund into the stock market. It is important to note that the NDC scheme fully conforms to theinitial intention of the policy-makers who designed the partially funded pension scheme inmid-1990s.
Since the mid-1990s, China has adopted a partially funded pension scheme in building itssocial security system. However, after nearly 10 years of operations, people found that theserious moral hazard problem of contribution defaults and loss of control concerningpension payment stemmed from this partially funded pension scheme. This institutionalarrangement has also resulted in the so-called adverse selection in non-market institutions,which in turn is capable of destroying the current system.This article argues for the introduction of the Notional Defined Contribution (NDC)scheme, because it can solve the problem of moral hazard and adverse selection. Moreover,it can solve the problem of a lack of institutional conditions for the entry of the social securityfund into the stock market. It is important to note that the NDC scheme fully conforms to theinitial intention of the policy-makers who designed the partially funded pension scheme inmid-1990s.
