Enterprises And Government Organizations And Institutions Of The Basic Pension Gap

In China there has always been a gap between the pension of retirees from private and public sector, which is frequently discussed. The gap is derived from the different pension system in these sectors. Recently Chinese government set specific policy to raise the pension level of retirees from enterprise and meanwhile tried to reform the pension system of non-profit institutes. These policies aim to narrow the gap. The influence of the policies is exerted not only to the pension level of retirees, but also to the sustainable development of Chinese social welfare system. The study on this gap has theoretical and realistic meaning to the development of pension system and social welfare system in China.This thesis studies on the gap between the pension of retirees from private and public sectors. A group analysis proved that under pay-as-you-go system, the pension contributions should be allocated pro-rata, i.e. the same with the ratio of number of people in different sectors. Data shows that the current replacement rate is not the optimal solution. Then an individual analysis proved that the different pension to some extent compensated the different human capital investment between employees of private and public sector, but the effect of such delayed compensation is not significant. Based on these findings, it is suggested that public sector should be included in the same pension system with the private sector and pension plans for public sector should be established to supplement their income.