Association for Public Policy Analysis & Management

This study examines the effect of pension reform in China with its existing inequalities across social groups and the complementary role of intergenerational assistance and self-support on the life satisfaction of retired urban residents in China using an ordered logit regression model with 2015 national representative data from China’s Health and Retirement Longitudinal Survey. Our sample consists of a cross-sectional dataset of 3,815 retired urban elderly aged 60 and above. The empirical results depict that though enjoying benefits from the public pension scheme generally enhances life satisfaction, beneficiaries of the Government and Institution Pension and Enterprise Employee Basic Pension are more advantaged than beneficiaries under the Urban-Rural Social Pension Scheme. The pension inequalities existing at provincial levels and across social groups such as gender and residence registration status also affect life satisfaction adversely. Women and rural ‘Hukou’ registered retired urban residents are at an apparent disadvantage. Getting financial and emotional support from children broadly improve life satisfaction. However, non-beneficiaries of the public pension benefit more from the financial support of children than public pension beneficiaries. Self-support through home ownership and wealth management in forms of self-employment activities and proceeds from renting out owned apartment enhances life satisfaction significantly. Largely, retired urban elderly have a higher life satisfaction when they are financially independent of children and are supported by state pension schemes. It is therefore imperative for the government to institute policies to promote personal finance initiatives by the elderly while improving the pension scheme and reducing pension inequality.