Study On The Main Problems Of China’s Social Security Fund

The improvement of the social security system is the sign of weighing a country’s economic developing level. The pension funds is an important part of the social security system, and at present the social security system in China is made up of the basic old-age insurance fund, the national social security fund, enterprise annuity fund and commercial endowment insurance. Pension funds is both related to people’s livelihood and the national economy development, so it has been gotten more and more attention and the investment management of pension funds has increasingly become a focus of the whole society. As everyone knows, an important cause of the outbreak of the Greek sovereign debt crisis in2010and the European debt crisis caused by the pension fund management problems, for more than two years of European sovereign debt crisis continued for three years and led to the economic recession, political turbulent, the prime minister resigned, got serious consequences, suffered heavy losses. On one hand, the management of pension funds in China should learn from the European sovereign debt crisis, on the other hand it also shows that the strengthening of the pension funds’investment management, so as to ensure pension funds security, stability, sustainable operation, ensure pension funds’value maintaining and adding has become a worldwide common task.At present, China’s pension funds has been facing problems such as the huge implicit debt caused by pension reform, the population aging since the21st Century, high inflation occurs with the rapid development of economy which leading pension funds erode and its purchasing-power decreases and many other practical problems, will cause the pension payment crisis in future. The pressure of China’s pension funds to preserve and increase its value is growing. Meanwhile, China’s pension reforming still need to further deepen, related legal system for investment management of pension funds need to improve, the supervision mechanism for investment management need to establish and improve, especially under the financial globalization situation the investment environment of the pension funds in China’s capital market urgently need to cultivate and improve etc., all this means the pension funds’ investment in China will face more and more risk. Therefore, how to make a scientific decision, to make effective investment, to ensure the implementation of the pension fund’s objectives, becomes a major issue which must be solved. The dissertation analyzed some of the typical illegal events related to pension fund at home and abroad, emphasized the importance of pension fund investment risk management; discussed the identification and measurement of its investment risk; constructed the model for measuring investment risk based on VaR, selected the investments’relevant historical statistical data of pension funds in Chinese capital market as a sample, made the empirical analysis of the pension fund’s investment risk.The dissertation explored and examined the typical management of the national pension fund in the world to start, based on China’s national conditions, analyzed the asset allocation of pension fund in its investments, pointed out that effective measures and asset allocation is an important key means of reducing and controlling investment risk. Then, set up the pension fund asset allocation models under China’s current policy constraints, and thus made the empirical analysis and put forward relevant proposals.In addition, pension fund investment regulation was effective way to reduce their investment risk, ensured the effective protection of investment income. No regulation, no success of pension funds’ investment.Through the research of pension funds’investment management and supervision model of several typical countries in the world, the dissertation analysed and compared the current main different investment management model and its advantages and disadvantages and investment rules.And on this basis, it put forward that China should select a "mixed mode" regulatory approach which combined the "Prudent Person Rule" and "Quantitative Restrictions Rule" according to the characteristics and actual policy conditions. The "mixed mode" should be an effective supervision way for Chinese pension funds’investment.The research results will be helpful to improve the investment environment for China’s pension funds, further to raise the level of pension funds’investment management; contribute to the realization management target of the pension funds’ security, stability and sustainable developing.