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China’s old-age reforms reduce long-run economic risks

Friday, October 4, 2024

Significance

The reform aims to bolster the size and quality of the workforce and ensure the long-term sustainability of pension funds. The number of years formal workers must contribute to pensions will also increase.

Impacts

  • A higher official retirement age will enable firms to retain skilled workers longer, aiding workforce quality and cutting turnover costs.
  • Foreign asset managers can leverage pension product design experience to gain a foothold in China’s underdeveloped private pension sector.
  • Reforms to expand the employee contribution and voluntary aspects of the pension system will boost investment in domestic stock markets.

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