China: Pension Provision and Pension Administration

In the long term, there is little doubt that China will be better off with a single and unified pension insurance system covering the whole country, just as most of other countries do. In the short term, however, it is feasible for China to establish only a province-based pension system, a system that is more unified than the enterprise-based and county-based alternatives, but nevertheless retains a degree of fragmentation. If we conceive of the pension reform as a process of redistributing costs and benefits, then the reform inevitably imposes costs on some groups and brings benefits to others. For obviously reasons, those whose interests are damaged in the process resist changes, while those whose interests are advanced support changes. Conflicts between the losers and gainers would affect the outcome of the reform in one way or another. Three categories of such conflicts have been observed. [Background paper for World Bank project, 1995]