Research on Countermeasures for the Sustainability Risks of China's Pension Funds

DOI: https://doi.org/10.62517/jbm.202409417

Author(s)

Xiao Zheng

Affiliation(s)

State Information Center, Xicheng District, No. 58 Sanlihe Road, Beijing , China

Abstract

As China experiences an intensifying aging population trend, the sustainability risks associated with the income and expenditure of pension funds are increasingly highlighted. These challenges include widening gaps between income and expenditures, imbalances in funding pillars, and exacerbated regional developmental disparities. The efficacy of current reform policies reveals certain limitations. This thesis suggests reforming the pension system using principles of behavioral economics, specifically through "nudging". By exploiting individual behavioral inertia, the implementation of an automatic registration scheme combined with the "Save More Tomorrow" mechanism can mitigate feelings of deprivation. The establishment of an electronic pension account system is proposed to motivate individual contributions and investment behaviors. Moreover, transforming tax deferment policies from tax incentives to direct subsidies is recommended to reduce the government's additional tax burden and enhance individual satisfaction.

Keywords

Pension Fund Income and Expenditure Risks; Behavioral Economics; Nudge Incentive Mechanisms

References

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