Issues On Financial Pension Theory

When facing the pension payment difficulty brought about by the aging population, countries all over the world reform pension system one after another in order to realize equilibrium of pension finance system. China also confronts the serious payment crisis day by day, which is caused mainly by the following reasons: First, financing model in China changes from traditional pay-as-you-go system to fully funded system, during the course of which nearly 2 000 billion yuan of transfer cost is produced. So a large amount of fund is needed to be raised for digesting it; Second, investment of pension is strictly limited in China, where pension fund is mainly invested in bank and bonds, so that it is hard to gain on pension fund. Third, because of unreasonable design for granting standard and benefit level, and serious ahead-of-time retirement, expenditure of pension fund is thus increased; Fourth, system of pension management is not perfect, so pension fund is seriously corrupted, occupied and illegally used.In order to solve the serious imbalance in financial revenue and expenditure caused by the problems above, the writer study the four steps in financial management of pension fund: financing, investment, granting and management. This study seeks to achieve appropriate pension funding, effective pension investment, effective pension granting and efficient pension management.In my opinion, on financing model, the main ways to solve transfer cost are adjusting financial expenditure structure and dividing state-owned asset, for there is no room in digesting transfer cost by increasing the required contribution, improving the age of retirement and reducing benefit level.On investment of pension fund, in order to gain on pension fund, China should lessen the regulation on investment, enter capital market and take the measure of diversifying investment combination. There are three indexes for assessing investment achievement: investment returns, the required contribution and management cost. For good pension fund, investment returns is high, the required contribution and management cost is low.On granting of pension fund, first, granting standard should be improved in the following three aspects: divisor for calculating monthly standard of individual account should be average surplus life-span, not 120, so that when average surplus life-span is above 10 year, socially funded account wouldn't be used for compensating the gap of individual account; hedge rate of pension fund in individual account should be linked tosalary raise rate before retirement and should be interest rate of time deposit after retirement; last year's monthly average salary of the province should be used for calculating indexed monthly average salary of transitional pension. Second, measures should be taken to restrict the phenomenon of ahead-of-time retirement. Lastly, benefit level should be redesigned so that it is not lower than before and wouldn't add the financial burden in future.On management of pension fund, as the main mechanism of pension operating is separation and mutual restrict of ownership, operating right and superintendence, so It's advised that management system of pension fund is comprised of administration management system and operating management system, while operating management system is made up of legal person, the manager, the custodian and the investor. Meanwhile, government should take draconian regulation mode to supervise pension fund. The main objective of pension debt management is to secure sufficient accumulation of pension, and honor promises to future beneficiary. The means of management include compulsory contribution and index management. In order to prevent uncertainty of investment returns resulting from the unstable capital market, managing asset is necessary. The management of pension investment will deal with the diversification of the pension assets and managing of investment profits. Supervision of investment management structure includes daily supervision, qualification supervision, and comp...