Abstract: Implicit pension debt (IPD) is the key issue which troubles China’s pension reform. Unlike the existing papers in the domestic that estimate accrued-to-date liabilities, this paper uses actuarial method to estimate the size of two other kinds of IPD——current workers and pensioners’ liabilities and open-system liabilities. The results indicate that the contribution of participators in 2000 will be far from covering the needs of their future pension benefits, but due to the vast potential of coverage extension in China, continual new entrants will gradually make the financial status of social pooling funds better in the future twenty years. From the point of new entrants’ contributions and benefits during the whole life time, whether they will contribute to the settlement of current workers and pensioners’ liabilities in 2000 depends on the relative size of wage growth rate and discount rate in the future and concrete pension provisions. Under the present pension framework, if the wage growth rate is higher than the discount rate, new entrants are net gainers and female gains much more than male, so new entrants will not in deed contribute to the settlement of existing liabilities but just delay the pension crisis. Based on the above conclusion, this paper puts forward some suggestion of establishing long term effective mechanism of China’s pension system.

Key words: Implicit Pension Debt, Transition Cost, Pay-as-you-go