Fragmentation in Social Security Old-Age Benefit Provision in China

Currently, in many countries most workers are covered by a national social security benefits program that applies equally in all parts of the country. In China, however, social security old-age benefits are provided in a highly fragmented manner. This article documents the high degree of fragmentation. It discusses both why that has occurred and the effects of the fragmentation on participants. It examines effects of the fragmentation on benefit levels, focusing on variations in the generosity of benefit formulas but also considering other measures of benefit adequacy. Fragmentation is seen to cause differences in benefit levels even within a single city. While the new National Rural Pension Scheme is a major improvement in the provision of retirement security for rural workers, important differences still exist in the social security programs for urban and rural workers.