Pension and Social Insurance
This domain examines China's multi-pillar retirement system and the actuarial techniques used to cost and value retirement promises. The exam tests the institutional detail of 基本养老保险, 企业年金/职业年金 and 个人养老金, alongside the standard costing methods (accrued benefit, projected unit credit, entry age normal) and the assumptions that drive liability measurement.
The three pillars
- 第一支柱: 基本养老保险, split into 城镇职工基本养老保险 and 城乡居民基本养老保险.
- 第二支柱: 企业年金 (voluntary, employer-sponsored) and 职业年金 (mandatory for public-sector employees). Both are defined contribution in accumulation but provide annuitised benefits.
- 第三支柱: 个人养老金, piloted in 36 cities from November 2022 and extended nationwide from 15 December 2024, with an annual contribution cap of 12,000 yuan and tax deferral on contributions and investment returns.
城镇职工基本养老保险 mechanics
- 统账结合: a pay-as-you-go 社会统筹 pool plus a funded 个人账户. Employer contribution is 16%, employee 8%, and the 个人账户 crediting rate is set centrally.
- 基础养老金 = (当地上年度在岗职工月平均工资 + 本人指数化月平均缴费工资)/2 × 缴费年限 × 1%.
- 个人账户养老金 = 个人账户储存额 ÷ 计发月数 (139 at age 60). The 计发月数 is a payout divisor, not an annuity factor - it embeds no interest.
- 延迟退休: from 1 January 2025, male retirement age rises from 60 to 63 and female from 50/55 to 55/58 over 15 years; the minimum contribution period rises from 15 to 20 years starting in 2030.
Actuarial costing
- 应计福利法 / projected unit credit attributes benefit to each year of service and measures the liability for service to date using projected final salary.
- 入职年龄法 spreads the total cost evenly as a percentage of pay; 累计给付法 measures only benefits already vested.
Worked example
A final-salary scheme pays 1% of final salary per year of service. Current salary is 120,000, projected final salary 200,000 at retirement in 20 years, with 10 years of past service. Accrued benefit = 1% × 10 × 200,000 = 20,000 per year. With an annuity factor at retirement of 13.5 and a 3% discount rate (v²⁰ = 0.5537), the PUC liability = 20,000 × 13.5 × 0.5537 ≈ 149,500. Next year's service cost adds 1% × 200,000 × 13.5 × 0.5537 ≈ 14,950, plus interest on the opening liability.
Traps that cost marks
- Confusing the 计发月数 with an annuity factor.
- Using current rather than projected final salary in a PUC valuation.
- Treating 社会统筹 pay-as-you-go financing as if it were a funded account.