In the era when the pension insurance system had not yet been established, the pension problem of employees was mainly borne by the unit retirement system. At that time, the retirement allowance was completely dependent on the employer where the employee worked before retirement, and its calculation was mainly based on the continuous length of service of the employee. The longer the length of service, the higher the proportion of retirement allowance, which can reach up to 90% of the original salary of employees. To a certain extent, this system reflects the loyalty and contribution of employees to the unit, but it also exposes the high dependence on the unit and the lack of social fairness.
However, the changes of the times and the progress of society have made the original retirement system gradually inadequate. In 1995, the State Council issued the Notice on Deepening the Reform of the Pension Insurance System for Employees of Enterprises in a timely manner, which marked that the pension insurance system in mainland China had entered a new historical stage. The new endowment insurance model is presented in a way that combines social pooling and personal accounts, which not only reflects the mutual aid of the society, but also reflects the sense of responsibility of the individual.
Under this new model, the contribution of the pension is borne by both the unit and the individual. Part of the funds is allocated to the pooled fund to pay the pensions of retirees, which partly reflects the mutual aid of society; The other part of the funds goes into the personal account, and the accumulation system is adopted, that is, the more individuals contribute, the more pension they can get after retirement. The contribution ratio of the personal account is directly related to the salary level of the individual, which also reflects the main responsibility of the individual in the old-age security.
Overall, the new pension system is not only fairer and more sustainable, but also more focused on individual responsibility and participation. The length of the payment period and the size of the payment base will directly affect the amount of pension that can be received after retirement. This system design not only encourages individuals to actively participate in old-age security, but also ensures the steady operation of the social old-age security system.