A Study of the Individual Pension Funds Allocation Strategy in China

Abstract

Building a multi-level pension system is urgently needed as China's aging issue gets more serious. Individual pension funds can considerably improve the quality of life for retirees by providing a stable source of income during their retirement years. By supporting the development and adoption of individual pension funds, China can not only improve the financial security of its citizens, but also contribute to the long-term viability of its social security system as a whole.

The study investigates individual pension funds in developed markets, with a particular emphasis on the development of target date funds and target risk funds. The study also employs Monte Carlo simulations to compare the market performance and utility performance of various strategies in order to determine which fund strategy is best suited for Chinese individual pension funds, thereby assisting individuals in making more effective pension investments in order to accumulate more wealth after retirement.