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Sustainability 2016, 8(1), 46; doi:10.3390/su8010046

Stochastic Forecast of the Financial Sustainability of Basic Pension in China

1
College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China
2
School of Economics and Management, Henan Polytechnic University, Jiaozuo 454003, China
*
Author to whom correspondence should be addressed.
Academic Editor: Marc A. Rosen
Received: 26 October 2015 / Revised: 24 December 2015 / Accepted: 31 December 2015 / Published: 13 January 2016
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Abstract

The paper focuses on the stochastic forecast of the financial sustainability ofbasic pension, based on predictions for the population of China. The population was calculated iteratively by using Leslie matrix. An auto-regressive moving average model was adapted for the predictions of the fertility rates and the mortality rates. The Monte Carlo stochastic method was adapted for the projections of the dynamic process of the financial sustainability of the basic pension from 2013 to 2087 by 5000 times simulation. The forecasting results show that the imbalance of basic pension will occur in 2026. If the statutory retirement age is postponed by five years, the occurrence of the financial gap of the basic pension may be delayedby about 20 years, and the median deficit of basic pension will be reduced by about 64.25% in 2087. View Full-Text
Keywords: basic pension; financial sustainability; population; postponed retirement; contributions and expenditures; Monte Carlo stochastic simulation basic pension; financial sustainability; population; postponed retirement; contributions and expenditures; Monte Carlo stochastic simulation
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Tian, Y.; Zhao, X. Stochastic Forecast of the Financial Sustainability of Basic Pension in China. Sustainability 2016, 8, 46.

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