A Study On The Corelation Of The Pension Structure And The Financial Structure

With the continuation of the pension reform, the discussion on the pension reform and the construction of pension system has been deeply carrying on. The priority of this research has also shifted from the argument which is better, pay-as-you-go or fund, to how to build a multi-level, multi-pillar and multi-mechanism accreted pension system. At the same time, more and more attention was paid to the corelation between pension system and financial system. The present research focuses on the impact of pension reform on the capital market and the internal connection between pension products and pension institutions. But the deeper structural determinants of pension reform haven't been given obvious concern. There may be many problems unsolved or left to be desired in how interactive relationship between the pension structure and the financial structure affects the formation of the optimal pension system after dissecting their interaction and mutual evolutionary process. Therefore, choosing structural evolution as a starting point or viewing angle, this paper researches the trend of pension reform in the world and the interaction of pension reform and financial development. Combined with the change of the demand of pension risk management and based on the theories of the financial structure evolvement and risk management, which all come from the functional perspective of finance, the paper has built the framework of theoretical analysis. This paper defines the pension structure as the relative position of the public pension plan and the private pension plan in pension system and the inner arrangements in the two kinds of pension plans. Further, the pension structure is divided into the overall pension structure and the private pension structure to generalize the evolutive rules of the pension structure and the financial structure, which act each other, from macro and micro angles respectively.Through the comparative analysis of the pension structure and the financial structure in OECD countries, especially in US, UK, Japan and the countries in Europe, this paper finds that there are obvious relativities in the overall pension structure and the financial structure and in the private pension structure and the financial structure. Deducting the process in which the overall pension structure and the financial structure interact, we hold up the discoveries that: (â… )the financial structure largely determines the overall pension structure through affecting the choice how to manage pension risk, and the evolvement of the financial structure and the risk management function followed promote constantly the evolution of the pension system through changing the methods managing pension risk; (â…¡)the overall pension structure also reacts up on the financial structure, because the development of private pension plans will push the bank-oriented financial system to the market-oriented one through changing the household's saving and investment behavior and promoting the development of financial market, which is an inevitable consequence of the enlargement of automotive pension funds. Similarly, in the correction of the private pension structure and the financial structure, the financial structure determines the competition situation of financial institutions in retirement market, which has been defined as the main part of the private pension structure. On the other hand, the development of private pension plans also promotes the enlargement of financial market as the contractual savings grow fast. Further investigating the financial innovations in pension products and service in the countries whose private pension plans are more mature, we proved of the spiral development mode of financial system based on financial innovations of pension products and service and the relation including competition and cooperation between financial intermediary and financial market in this procession. So a natural inference is that the financial innovations in the retire market will inevitablely promote the evolution of the financial structure. In addition, the competition environment in retirement market also in large extent influences the patterns of financial innovation.Compared with the OECD countries, China's the pension structure and financial structure are showing different characteristics, which are embodied in the following aspects: (â… )the coverage of the public pension plans is low, and the role of private pension plans in the pension system is almost negligible, so the formal pension institutions can't explain the most income which the retirees live on, which is interpreted by China's traditional family pension model and household savings model in East Asian countries; (â…¡)in the financial system, the structural unbalance exists in all aspects, the most outstanding one among which is the underdevelopment of financial market and the relatively low efficiency in bank industry.In general, there are many common characters between China and the OECD countries in the correction of the financial structure and the pension structure. However, due to the large differences in economic development, social operation model, political system and cultural customs etc., there are many pecularities in China. We can see from the two following aspects: one is our the selection of pension institutions which possesses more character of "institutional dependency", and the determinative role of the evolvement of the pension structure on the choice of pension risk management mode can't directly be embodied, but the determinative role of the financial structure on overall the pension structure registers as the restriction of our financial system to the development of our private pension plans; the other one is that the magistral situation and product structure of traditional financial institutions, especially insurers, reflect our financial system is not quick to manage pension risk.The changes of population structure continue to push the process of pension reform and determine the direction of pension reform, and also reflect the relative independence of the evolution of a country's pension system. At the same time, the goal of pension reform sets forth higher requirement on the function of financial system and influences the sustainable development of the long-term financial system deeply. In this paper, we define the concept of the pension structure, and try to probe the correction between pension system and financial system from the structural view. Based on the theory of functional perspective of finance and the theory of financial intermediary, the general rules of the interaction between the pension structure and the financial structure are explained from the evolvement of the function of risk management and the financial structure to make the innovation of the angles of research and the breakthrough of theoretical research.