Under this paper, I undertake an examination of the reform in China's social security system. It is very clear that the old PAYG system is not suitable for China any longer. The old people take more and more part in the population distribution. This leads to a financial problem of the old system. Now the government wants to adopt some fund system to replace the old one. The so-called three-pillars system seems to solve the problem of old-age trend, however, the inherited burden from the old system cannot be ignored. So when the state designs the three-pillars system, it must consider the way to digest the burden. This paper tries to build models to explain the payroll rate decision formula. Through the formula, I try to discover the problem that exists in the three-pillars system....[ Read more ]

Under this paper, I undertake an examination of the reform in China's social security system. It is very clear that the old PAYG system is not suitable for China any longer. The old people take more and more part in the population distribution. This leads to a financial problem of the old system. Now the government wants to adopt some fund system to replace the old one. The so-called three-pillars system seems to solve the problem of old-age trend, however, the inherited burden from the old system cannot be ignored. So when the state designs the three-pillars system, it must consider the way to digest the burden. This paper tries to build models to explain the payroll rate decision formula. Through the formula, I try to discover the problem that exists in the three-pillars system.