Pension, also known as pension, is an insurance treatment paid in the form of money according to workers' contribution to society and their eligibility for endowment insurance, which is used to protect the basic needs of employees after retirement.

The basic old-age insurance for enterprise employees in China adopts the mode of "social pooling" and "personal account", that is, the enterprise pays the total wages of employees to the social pooling fund account according to a certain proportion (20%), and then pays the personal wages of employees to the personal account according to a certain proportion (8%). These two accounts are collectively referred to as the endowment insurance fund. After retirement, according to the ratio of the employee's monthly (or annual) payment wage to the average social wage (payment index), considering the factors such as the average social wage in the year before retirement, the funds (basic pension) are allocated from the social pooling account, and a certain proportion of the funds in the personal wage account (personal account pension) are used as the monthly pension after retirement. The pension will be adjusted with the adjustment of the average social wage. When an employee dies, the funds in the social pooling account will not be returned to the employee, and the balance in the personal account can be inherited. Personal account deposits bear interest according to the one-year deposit rate announced by the bank at that time. For simplicity, the interest rate is set at 3%.

The payment of pension is closely related to the wages of employees and the average social wage; The increase in wages is related to economic growth. In the past 30 years, China's economy has developed rapidly, and the wage growth rate is also very high. However, the economic and wage growth rates in developed countries are low. The strategic goal of China's economic development is to make China's per capita GNP reach the level of moderately developed countries in the middle of 2 1 century.

At present, the old-age insurance reform in China is in a transitional period. An important goal of endowment insurance management is to balance the income and expenditure of endowment insurance fund, which is related to social stability and the smooth transition of an aging society. An important factor affecting the balance of income and expenditure of endowment insurance fund is the substitution rate. The replacement rate refers to the proportion of pension when employees just retire to their pre-retirement wages. According to the general thinking of the country on the basic old-age insurance system, the target replacement rate of the basic old-age insurance in the future is determined to be 58.5%. The replacement rate is low, the living standard of retired workers is low, and the balance of income and expenditure of endowment insurance fund is easy to maintain. If the replacement rate is high, the living standard of retired workers will be high, and the balance of pension funds will be difficult to maintain, and there may be a gap. The so-called gap refers to the balance of payments when the endowment insurance fund cannot make ends meet.