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How private sector participation improves retirement preparation: A case from China
Journal
The Geneva papers on risk and insurance - issues and practice
ISSN
1018-5895
ISSN-Digital
2311-0112
Type
journal article
Date Issued
2018
Author(s)
Abstract
This paper shows empirically how private sector participation improves the adequacy and equality of retirement preparation in a three-pillar retirement system. We develop a three-layer replacement rate approach based on the China Health and Retirement Longitudinal Study, a nationwide representative household survey of a mid- and old-age population. Our empirical evidence shows that private sector participation increases the mean (median) replacement rate in 2013 from 35.4% (15.4%) to 69.8% (48.7%). The evidence also suggests that annuitizing home equity is responsible for a large portion of this increase. Surprisingly, private sector participation also mitigates the inequality of retirement preparation between the formal and informal sectors. Our empirical findings emphasize the importance of annuitizable private savings for the retirement income security of the one-fifth of the global population living in a representatively high-growth and rapidly aging economy.
Language
English
Keywords
retirement preparation
pension
replacement rate
adequacy
equality
China
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Palgrave Macmillan
Publisher place
Basingstoke
Division(s)
Contact Email Address
ruo.jia@pku.edu.cn
Eprints ID
255117