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The Experience of Britain's Reform of Its Pension System (No.210, 2020)
2020-10-15
By Yu Tao, Research Institute of Finance, DRC
Research Report, No.210, 2020 (Total 5954) 2020-8-27
Abstract: In face of challenges such as population aging, the UK has innovated its pension system. It has set up a national pension system with a low security level and a broad coverage, put flexible compulsory occupational pension in place, served the third pillar pension of wealthy individuals, delayed retirement age and adjusted the pensionable qualification in a dynamic manner, thus equipping Britain with the world-leading sustainable pension system. The success of the UK pension system reform is mainly due to four aspects: top design, clear responsibility of all parties, optimized incentive mechanism and emphasis on professional evaluation. In order to cope with the aging population and enhance the sustainability of its pension system, China needs to start a new round of pension system reform at the earliest date. A unified basic national pension system set by the government for urban and rural residents needs to be established. The second pillar pension needs to be strengthened; the third pillar pension has to be developed to meet the personalized needs of high security level; and the three pillars of pension ought to be optimized from the perspective of top-level design. Besides, a dynamic and transparent mechanism for adjusting the pensionable age also needs to be established.
Keywords: basic national pension, occupational pension, delay of retirement
