Study On The New-Type Socialized Old-Age Insurance In China's Rural Areas

It is an important part of a socialized insurance system covering both urban and rural area to establish New-Type Rural Socialized Old-age Insurance (NRSOI) integrating urban and rural area. This paper discusses the path choice of realizing integration of urban and rural old-age insurance in the views of background of original rural old-age insurance, NRSOI and practice of Beijing.Firstly, the mail defect of original rural old-age insurance is to rely on just personal saving and personal account full accumulation. The pension of peasants comes only from personal fund without government subsidy and public finance. Its attribute of socialized old-age insurance is not obvious and this system has no characters of mutual-aid and fairness. The level of coordination of pension fund in county is too low and it is hard to protect and increase its value. The standard of contribution is unreasonable so that it's difficult to realize the policy goal of wide coverage and basic insurance.Secondly, what decides the success of NRSOI is institutionalization of government input. The government must take the responsibility of financial input so as to realize old-age care. According to the "three-pillar" system put forward by World Bank, the main part of NRSOI must be non-contribution basic national pension and secondary part free-contribution individual account. Basic pension is funded by government finance with the goal of avoiding poverty. Non-contribution pension which is fundamental, fair and universal-benefit, can make sure peasants in underdeveloped or poor areas obtain protection. Regarding to imbalance of regional economic, the minimum level of pension should be set by relative poverty and be feasible in government financial input.Thirdly, the practice of Beijing proves that full coverage of urban and rural area and integration can be true only when the government effectively implements accountability of financial input. In Beijing government expenditure is invested from contribution to payment to establish basic pension. This improves fairness and efficiency of public finance and makes pension system sustainable. It also answers the question of how to supply old-age insurance to peasants and how to integrate urban and rural old-age insurance. Amount of basic pension can be adjusted along with revenue under the model of "individual account+basic pension" in Beijing. This model has high elasticity and transferability. Socialized insurance expenditure including old-age pension subsidy in Beijing accounts for about 10% of revenue, higher than the national average level but far lower than the level of 40% in developed countries. Financial burden is light and financial subsidy is sustainable.