Abstract: Pension plays an important role in determining how aging will influence household saving. Adding PAYG pension into the analytical framework of aging and household savings, this paper puts forward the proposition that aging has an inverted U shaped influence on household savings using OLG model, and makes empirical tests based on Chinese provincial panel data. The empirical results show that: China is just at the turning point stage of the inverted U shaped influence on household savings at this time, and pension system is one of the important reasons why the influence of aging on household savings is different from LCH. Therefore, with the acceleration of population aging, the saving rate of China will probably decrease in the future, so government should take measures as soon as possible.

Key words: aging, household saving, pension, turning point