A Study on effect of the Reform of Cinese Public Pension System

This article studies the effects on benefit improvement when the public pension system undergo a reform enforced by the State Council from the File(1997)26 to the File(2005)38. The approach used here is firstly to design two key variables and a series of metrics on the effect of the reform, then to compare the differences between the two styles of the pension system. The main conclusions are the following: the reform does not change the total pensionable salary basis, but the actual pension replacement ratio is higher than that estimated by the government, in fact the increase of the ratio is about 6.3 percentages. However, for an individual retiree the extent of pension improvement depends on the two key variables. In short, the reform will improve the relation of fairness and motivation and make the pension system more scientific.