Pension reform in China: Preparing for the future

China is revamping its enterprise‐based old‐age security system and introducing a pension programme financed by the employer, employee, and the government through a combination of pooled funds and individual accounts. The new system is expanding coverage to the urban workforce outside the state sector and protecting benefits against inflation. The decentralised nature of the pension pools, however, limits increases in efficiency and portability of pension benefits. Sustainability of the revised system will require attention to fund management regulations and preparation for rapid population ageing by expanding coverage to rural wage earners and reducing benefits.