What does the social security replacement rate mean?

Social security replacement rate refers to the ratio of pension received by retirees in the year of retirement to pre-retirement wage income. Used to measure the living security level of workers after retirement, the higher the replacement rate means that the income after retirement is relatively high. The pension replacement rate reflects the perfection of the pension insurance system in a region or country. At present, the replacement rate of social security pension in China is around 40%, which is relatively low. Coupled with the slow progress of the enterprise annuity system, the living standard of retirees can only reach the basic guarantee level.

How much is the pension replacement rate generally better?

Considering the socialist nature of our country, the historical situation of employees' pension treatment, the payment level of employees and enterprises, and the state's pension responsibility to citizens, the pension replacement rate should generally be kept above 80%. Below this level, it means that the living standard of retirees is obviously lower than when they are on the job, and the level of living security is poor.

In order to ensure that the living standards of employees will not be greatly reduced after retirement, let retired employees share the fruits of social development and realize dignified retirement, the pension replacement rate must be maintained at a reasonable level.