## Pension Reform in China: The Need for a New Approach

_IMF Working Papers, May 1, 2007_

## Source details

**Canonical URL:** [Pension Reform in China: The Need for a New Approach](https://www.imf.org/en/publications/wp/issues/2016/12/31/pension-reform-in-china-the-need-for-a-new-approach-20671)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/pension-reform-in-china-the-need-for-a-new-approach-20671/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/pension-reform-in-china-the-need-for-a-new-approach-20671/index.json)
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## Bibliographic details
- Authors: Steven V Dunaway, Vivek Arora
- Published: May 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451866735.001

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### Context and problem statement
- Rapid aging of China's population over the next few decades makes it important for a new pension system with broad and adequate coverage to be put in place quickly.
- Pension reforms, first initiated in 1997, have become bogged down in difficulties over dealing with the "legacy costs" associated with the relatively more generous benefits provided under the old system.
- The paper argues that the legacy problem should be separated from the problem of setting up a new pension system.

### Key findings
- The legacy costs of the old system are a major impediment to reform and have stalled progress since reforms began in 1997.
- A new pension system should aim to cover both urban and rural workers.
- The need for timely action is emphasized given demographic pressures from rapid population aging.

### Concrete proposals and policy recommendations
- Separate legacy liabilities from the institutional design and financing of a new pension system.
- Design and implement a new pension system that:
  - Provides broad coverage across urban and rural populations.
  - Delivers adequate benefits while taking into account fiscal implications of legacy costs.
- Address legacy costs through mechanisms distinct from the operational framework of the new system (the paper suggests separating the legacy problem from system design).

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## Content in this bundle

- **1. Demographics**
  - [1. Demographics (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp07109.pdf.md){rel="alternate" type="text/markdown"}
  - [1. Demographics (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp07109.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/pension-reform-in-china-the-need-for-a-new-approach-20671_