Study On Taiwan Of Labor Insurance Funds Optimal Asset Allocation And National Pension System Payment Of Research

Because of the decreasing birthrate, the increasing aging population, and the disable population caused by aging, the national pension system has become more and more significant in every developed country.The paper investigates the Asset-Liability Management for Labor Insurance Fund. We utiliae Immunization Theory and Portfolio Theory selection model to immunize the surplus of Labor Insurance Funds against interest-rate fluctuations and to maximize expected return of Labor Insurance Funds simultaneously.This research paper is to build a midel as financed national pension system analysis. The research result reveals that in three level of population estimation, if the pension system in Taiwan was founded in 2009, the total income of annual premium would be less than the total cos of annual benefit in 2027. Only when the yield rate of the insurance reserve is 7% higher than the growth rate of the pension benefit, could the insurance reserve maintain balanced and stable enough to pay the future benefit. Otherwise, if the yield rate of the insurance reserve was not 7% higher than the growth rate of the pension benefit, the accumulation of insurance reserve would decrease by years. Under the circumstances, Twiwan must activate another premium rate adjusting system. However, because of the again popubtion, the pemiun rate in 2053 will reach 25% of lthe benefit. Whether the new-adjusted insurance rate would be acceptable of not for people will be a valuable question, not to mention the complicated situation once the politic issues interfered in. Therefor, whether the national pension system would be independent and stable will be twstified by time.The realization of national pension system would profoundly influence the finance, economy, and the society of the country. Meanwhile, the background financial situation would affect the realization of national pension system. Therefore, to secure such a social security system, the financial situation of the country must be examined very closely. In addition, we use the data from Labor Insurance Funds from 1997 to 2007 to demonstrate the implementation of our model. We calculate the optimal asset allocation and the ALM cost uder different lump-sum/annuity selection ratio time horizion and contribution rated. The empirical results from this study show that:1. Assuming 100% and 80% participants choice annuity, to prevent the insolvency of Labor Insurance Fund from interest-rate fluctuations in 30 and 40 years,the Labor Insurance Fund from interest-rate fluctuations in 30 and 40 years, the Labor Insurance premium must increase to 8.3%. Assuming 50% participants choice annuity, to prevent the insolvency of Labor Insurance Fund from interest-rate fluctuations in 50 yeas, the Labor Insurance premium msut increase to 8%.2. To prolong the period over which the Labor Insurance Funds can immuniae its surplus against interest-rate fluctuations, a large proportion of the investment asset should be allocate from band deposit to bond and stock.3. ALM needs cost. Assuming 100% participants choice annuity, the average ALM cost is 0.3695%. Assuming 80% participants choice annuity, the average ALM cost is 0.434%. Assynubg 50% participants choice annuity, the average ALM cost is 0.384%. We find the average ALM cost is very small under any lump-sum/annuity selection ratio. Therefore, we suggest Bureau of Labor Insurance should atart to implement ALM as soon as possible to avoid the affect of interest-rate fluctuations.