What is Next for China's Pension System?

Overview

Over the last two decades, China has built the world's largest pension system in terms of absolute coverage, with about 1.075 billion people covered by basic pension schemes at the end of 2025. Successive reforms have aimed at improving the inclusiveness, adequacy and sustainability of the system by progressively shifting away from a status-based and employment-segmented arrangement to a three-tier structure more suited to the current realities. This report examines the current pension system's architecture, analysing whether the scale that China has achieved translates into adequate and sustainable coverage across different types of workers.

Three main takeaways stem from the report. First, the central challenge is to translate broad pension participation into effective protection in old age across China's heterogeneous workforce. Second, administrative challenges to portability due to household registration conditions continue to affect pension participation for domestic migrant workers, who represented 39.1% of the labour force in 2024. Third, adequacy remains uneven across Tier 1 schemes, with benefits for the rural and urban residents pension scheme (RURPS) remaining modest compared to the urban employee pension scheme (UEPS). Recent reforms, including higher retirement ages, national pooling and efforts to ease household registration conditions, are a step forward in strengthening the system. However, responding to rapid population ageing while maintaining fiscal sustainability will remain at the centre of the reform agenda.