A Research On Budget Management In The Optimization Of Chinese Pension Insurance Policy

Population ageing has become an inevitable future, along with technological breakthroughs, economic growth and constantly improving standards for livelihood service delivery. In response to this phenomenon, international community has adopted various methods, including moderate adjustments in government functional boundaries, and optimized institutionalization of pension insura nce system through fiscal planning. In the 3rd Plenary Session of 18 t h Central Committee of the CPC, it is clearly indicated that effective fiscal policies establish a solid procedural foundation for optimizing the allocation of public resources, maintaining a collective market, improving social justice, and realizing long-term social stability. In terms of completing fiscal governance and improving living standards, the formulation of effective fiscal forecasting and policy, and the establishment of a fair and sustainable social security system are with profound importance.In view of the statement of ‘fiscal policy is the foundation and anchor for a state of government’, this dissertation attempts to provide solutions for pension insurance reform from a perspective on assessing fiscal policies. Following the study methods of ‘theoretical analysis – comparative studies – empirical research – policy system design’, the study would adopt methodologies in the combination of formative analysis and empirical research. In-depth and systematic discussion will be based on literature review and formative analysis, policy assessment and comparative study between different countries, and case study and empirical analysis. Associated with current Chinese pension insurance governance system, the analysis intends to be built upon government functional theory, civil rights, public goods in relation to the separation of fiscal power, and principal-agent theory. This study aims to provide suggestions on Chinese pension insurance budget governance and relevant strategies.Chapter I elaborates the theoretical foundation for compatible cooperation between fiscal budget governance and optimized pension insurance policies from the following four aspects:The first theoretical assumption is rooted in the analysis on government functions in western mainstream economics, Marxist political economics and transformative economics. The old age, considered as a prevalent social risk, is supposed to be provided with public pension products and service through in- and cross- generational redistribution of income, resulting from government compulsive actions. This process facilitates the realization of social fairness and distributive justice. Nonetheless, the solutions for how pension insurance system balances the relationships with government and markets, and how to achieve harmonization on maintaining social justice and improving economic efficacy for a certain country are waiting to be produced. In the search of universally applicable rules of development, the political, economic, historical and social realities of the chosen state need to be considered. During C hinese market economic transformation, central government, while improving proper formulation and implementation of old-age insurance, ought to seek solutions for unclear governmental control, absent market regulation and insufficient social governance.The second foundation, focusing on civil right theory, explains the necessity and different stages in the existence of pension system and social security. Securing civil rights through public choice mechanism, viewed as an essential concept in civil rights and political ethics for sovereign, has achieved a broad social consensus. Under the influence of different historical conditions and different political, economic and social environment, the implications of civil rights are varied, and contents of pension system are, accordingly, dissimilar.The third theoretical premise is in relation to public goods and the separation of fiscal power. It attempts to analyze the allocation of the responsibility for pension insurance between different government departments and internal incentive and restrictive mechanism. With consideration of the broad beneficial coverage of old-age system, indicating the entire citizenship, it would be more effective if central government bears the main responsibility. With the consideration of the efficiency of distribution and citizens’ preferences, it would be more favorable if local governments deliver pension service. Effective inter-governmental incentive and restrictive mechanism supposes to improve the outcomes of separated fiscal power, and avoid soft budget constraint issues.The fourth presumption, concentrating on principal-agent theory, discusses principal-agent relationship in pension insurance forecasting and how to improve the institutional system in the regulation of this relationship. In the public choice of social security policies, citizens, politicians and governments are linked in a triangle game connection. The adjustments on pension insurance policies should be in accordance with these three principals and their choosing preference with three principles. They are: firstly, with an ultimate aim on protecting basic civil rights and restricting abusive use of political power, individuals should be guided by policies to make decisions that benefit the public; Secondly, politicians need to be controlled by legislative methods and assessment on budget performance; Thirdly, through relevant constraint mechanism, government actions should be limited to moves that can facilitate the optimized allocation of the budgeting resource of pension insurance.The second C hapter, with reference to previous theoretical discussions, provides a comprehensive scrutinization on current status, problem and factors of C hinese old-age insurance budget management. These factors, partly resulting from social background during economic transformation, constrained by fiscal system transformation, demonstrate problem such as unclear government functional boundaries, insufficient methods and institutional support for budgeting process. Digging into the historical evolution of C hinese social old-age insurance system, we could summarize this process, starting from supportive moves in the reform of state-owned companies, has received constant influence from ‘marketization for state-owned firms’ and ‘from the pattern of centralization to decentralization in budget planning’. Therefore, in order to ensure a prosperous future of pension system and to deal with historical problems, it urgently requires us to establish a consistent and comprehensive project in budget management, to design strategies in responses to relevant problems, to promote and improve an optimized policy system, with an in-depth understanding on the importance of the invisible hand in resource distribution. The purpose lying behind the entire process is to minimize the overall social costs for improving pension insurance system.The directing goals for pension insurance budget management proposed in this research are as follows. Firstly, gaining a thorough understanding on pension insurance planning, we aim to complete appropriate budge governance according to relevant regulations. Secondly, in achieving the constraint on old-age insurance budget forecasting, we need to include government compulsive pension insurance income, expenditure and surplus in budget planning, with an aim on reflecting income and expenses of the funding accurately. It helps to clarify clear individual responsibility and facilitate transferability and accountability. Thirdly, a purpose on improving efficiency of budget governance put an emphasis on the consistency between central fiscal policy and pooled funds, with the assistance of actuarial techniques to realize cross-staged balance. Meanwhile, in the management of separating empty accounts and real accounts, we need to transfer empty ones into nominal accounts, maintain and increase the value of assets in real accounts, in order to achieve sustainability in budget planning.With the guidance of above purposes, the establishment of pension insurance budget governance is constituted by its system, contents and strategies on the management. In regards to factors contributing to the problems of budget management, there are acceptable resolutions for policy making. In the system of budge management, the responsibilities of central and local governments should be clearly clarified; the improvement of transferring procedure should play a better role in the realization of overall balanced pension service. In terms of the contents of budge management, we need to make efforts on increasing the quality o f income and expenditure budgeting, on maintaining the value of surplus assets, and on governing transformative cost for public sector organizations. In an aspect of the strategies of budge management, it is suggested to adopt budget projections, with an e ffective connection between old-age insurance and fiscal policy and a close attention on the achievement and value in pension system. There are four steps in budget projections. The first one is to combine the developmental strategies of pension insurance with medium- term fiscal planning, and to predict and scheme medium and long-term developing program for existing pension insurance policy, according to different levels of pooled pension funds. The tasks for second phase are to formulate, analysis and choose on the arrangement, projects and business activities for a certain period of time. It is supposed to be prioritized based on systematic analysis and cost benefit analysis. The third step focuses on distributive planning in response to these strategies. An assessment on pension insurance system is produced at the final stage, which encompasses well-rounded evaluation standards, reflecting of political, economic, social elements.The originality of this dissertation can be seen from two perspectives. It firstly has a unique view in conducting research. The thesis puts an emphasis on the thorough understanding of strategic adjustments in pension insurance, and summarizes the fundamental framework in relation to optimizing pension insurance policy and government budget. Secondly, in the study of the costs for public sector organizations during the policy transformation, through a quantitative modeling approach, the dissertation produces various suggestions on improving market mechanism, on encouraging yearly return on the investment of pension funds, in order to reduce fiscal burden and transformative costs.In conclusion, this study provides an analytical overview on current academic achievements on optimizing pension insurance policy and budget governance. With extensive study on international experience and representative case analysis, it summarizes valuable experience to be drawn upon, on the issue of optimized reform of pension insurance system based on effective government budget policy. Subsequently, it proposes suggestions on systematic reform, with an association with current C hinese pension insurance budget management status. It would have a long- lasting impact on theoretical creativity and directing reality.