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Meeting the Migrant Pension Challenge in China

Happy elderly couple

Bei Lu and John Piggott

This paper proposes a Notional Defined Contribution (NDC) mechanism to ensure pension mobility for migrating workers, in both the accumulation and drawdown phases. Plan governance would ensure independence from the three existing pension systems. Although the plan's design would be of the NDC type, requiring no pre-funding, in practice the relatively young migrant demographic has the potential to generate considerable reserves.

An appropriately structured NDC plan of this type is shown to be viable by reference to a previously developed model of Zhejiang Province's social security systems.

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