What are the disadvantages of China's traditional pension insurance system

(1) Pension insurance is integrated with employment, which greatly hinders labor mobility. Laborers are assigned to state-owned or collective units through government departments and become regular workers, and at the same time, they are entitled to pension insurance. Once a worker resigns or is dismissed from his or her original organization, the pension insurance benefits are lost. This kind of old-age insurance is highly correlated with employment, which is not conducive to labor mobility.

(2) The scope of pension insurance coverage is extremely narrow. At the beginning of the establishment of old-age insurance with the establishment of labor insurance, the scope of coverage still included state-run, public-private partnership, private, cooperative and other units, but later, under the guidance of the extreme leftist ideology, private companies lost their legal status and fell into decline. Only regular employees of State-owned companies and some collective companies are entitled to receive pensions after retirement. After the reform and opening up, many areas have seen the emergence of new collective economies, private economic units and self-employed people, but these people are not covered by the traditional pension insurance system. Obviously, this kind of pension insurance system can not adapt to the needs of a variety of economic components **** with the development.

(3) a single level of protection, only the basic pension insurance organized in accordance with state regulations, the company did not establish a supplementary pension insurance for employees (occupational pension), there is no personal pension savings insurance. Because of the single level of protection, on the one hand, causing the state to overburden, on the other hand, the low level of protection, the company's employees after retirement, the basic standard of living has been greatly reduced, once inflation increases, retirees are very easy to fall into poverty.

(4) the socialization of pension insurance is very low, the lack of social **** relief. The original system was established in the form of national security, should be the whole society to share the risk of old age, that is, should have a strong social mutual aid, but due to the unit to self-insurance, social **** relief is very poor. In the original economic system, employees eat the company "pot rice", the company ate the country "pot rice", although the unit of self-insurance, because under the system unit almost no market risk, often "immortality ", can still maintain operations. After the reform of the economic system, with the increase in company autonomy, the burden of old-age pensions was very uneven among companies. Many of the old company retirees accounted for a large proportion, coupled with the company's poor business conditions, a large number of companies bankruptcy, closure, relying on the unit to protect the basic livelihood of retirees has been unsustainable.

(5) The source of funding channels are few, there is no accumulation of funds. Funding channels are pay-as-you-go system, and employees do not need to contribute directly, all companies to withdraw 3% of the employee's salary. In terms of the form of financing, it is manifested in the fact that active employees are responsible for the pensions of retired employees, i.e., "the next generation feeds the previous generation". At the beginning of the establishment of the system, the number of retirees was small, and the ability to pay could still be guaranteed, but there was no accumulation of funds. With the rapid increase in retirees, the rapid expansion of the payment gap has been inevitable.