Assessment for Social Security Pilot in Jilin and Hei Longjiang of China

I. Introduction Since the partially-funded scheme was formally introduced into China’s social security system in 1995, combining social pooling with individual accounts (IA), some contributionsto IA have been used for current payments, as a result of transition costs. Therefore, the IA depleted, making the “combination of social pooling and individual accounts” only nominal. To achieve a partially-funded security scheme, the Central Government developed a pilot program in three northeas…

Assessment for Social Security Pilot in Jilin and Hei Longjiang of China

The present paper reviews the social security pilot in Jilin and Hei Longjiang that was carried out between 2004 and 2005. The pilot in the two provinces has basically achieved its main objectives, but there are still some unsolved problems, the most severe being lack of effective investment of the funds accumulated by individual accounts. During periods of high economic growth and high growth in average wages, this problem might undermine the partially-funded security system. To this end, the paper makes some suggestions, one of which is to introduce the notional defined contribution system.