Altruism, Uncertain Lifetime and Partially Funded Public Pension Replacement Rate

Based on altruistic individuals, this paper employs an overlapping generations model with uncertain lifetime to investigate the partially funded public pension system in China. The optimal social pool benefit replacement rate is derived in a market economy with social optimum. Our simulation results show that this rate decreases when the life expectancy rises or when the population growth rate falls, and further decreases in the joint case of risen life expectancy and fallen population growth rate. The result has several policy implications.