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Most countries have general pension schemes, as a matter of government policy. In many countries it has been thought that an ageing population creates a great problem for the continuation of these schemes. There are problems with the pension systems of China and Hong Kong , but they are not because the proportion of the population of working age is falling. They are, therefore, rather easier to solve. The reasons why pensions are, and should be, a major element of government policy, are worth examining in detail. Briefly, the purposes are to improve the personal capital and insurance markets, to counter unwise behaviour, to contribute to the reduction of poverty, and to redistribute between generations born at different times. There are many interesting questions about how these different purposes can best be achieved. One is how retirement and pensions should be related and determined. The effectiveness of the systems in Hong Kong and in the PRC in terms of these purposes will be assessed; and in conclusion we shall look at the likely directions of reform and briefly confront the thorny issue of rural pensions.
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