China's Public Pension System Mode Selection And Improvement

Based on Article 9 of International Covenant on Economic, Social and Cultural Rights, "The States Parties to the present Covenant recognize the right of everyone to social security, including social insurance". The setup of the social security is the symbol of the civilization and the progress of the human society and the pension system is a vital component of the social security system. A well-designed pension system has the function of supporting social development, harmonization and the stability of the society. In fact, the public pension system had existed for more than 100 years since the German set up the first mandatory pension system, and at the present, there are over 160 countries and regions had set up their pension system and the government played the role of the designer and seller of these pension systems. The public pension system which supported by the government became the most reliable insurance for the basic needs for the aged people.Since 1980 many countries made reform on the pension system. On one hand, the developed countries had to make reform under the pressure of aging trend of the population. On the other hand, the developing countries and economies in transition speeded up the setup of the pension system. Although there are many difference between these pension reforms, they had the same target that the pension system should be compatible with the level of the social and political development, improve the living standard of the old people and support the stability and development of the social and economy.In China, there are several adjustments in pension system since the setup of the public pension system in 1951 to fit the social and economy development. In 1997, China set up a pension system which combines the social pooling and individual account based on the experience of other countries and suggestion of the World Bank. After several years' practice, we find that there are a lot of problems have arisen because of the out-of-expectation complexity and difficulty of this pension system although the good intention when it was designed. There are several options when we faced this dilemma: one is staying in the track which is the combination of DB-PAYG and FDC system; option 2 is to jump out of the track to a pure DB-PAYG or a pure FDC system; option 3 is changing to NDC-PAYG system based on the experience of 6 countries in Europe and Asia. The selection of these options is the focus of the policy makers and researchers. Under this background, the dissertation made a deep theoretical and empirical research on the selection and design of the optimal pension system in China based on the integrated research on the pension system around the world, their pros and cons, their function rationale and effects and the most important, say the basic condition of China. This research is very important to the theoretical research and the practice.In this dissertation, the author made a deep analysis on the pension system around the world. The author also analyzes and compares the economic growth effect and social welfare effect of different pension systems based on the model constructed. Furthermore, the author focus on the analysis of the feasibility of these pension system in China and make a deep analysis on the selection of the optimal pension system in China based on the research mentioned above. Finally, the author put forward the suggestion on the optimal reform path to support the public pension reform policy in China based on our country's basic conditions.This dissertation is composed of 7 chapters. The chapter 1 is an introduction part of the dissertation, which contains the research issue the dissertation focused and the purpose of this dissertation, the significance of the study and the research design of the dissertation. The chapter 2 reviews the literature for this topic. This chapter systematically reviewed the public pension system selection in the literature of the domestic and foreign studies and the current status of the research which provides the theoretical basis for the research on public pension system selection. The chapter 3 is the background analysis of the dissertation. This chapter focused on the background of the development and the current status of the public pension system in China and other countries. The purpose the analysis is to provide the empirical background and theoretical framework to the research of the public pension system selection in China. The chapter 4 made the deep research on the function rationale of different public pension systems. Furthermore, the author analyzed and compared the economic growth effect and social welfare effect of different public pension systems based on the model constructed, including the effects to the national savings, labor supply, income re-distribution and dealing with the aging trend of the population. The chapter 5 studies the feasibility of the different public pension systems in China. Firstly the dissertation analyzed the difficulty we met for the current public pension system with the combination of social pooling and individual accounts. Then based on the research mentioned above, the dissertation analyzed the feasibility in China of FDC system, DBPAYG system and NDC system based on the theoretical model constructed. The chapter 6 made a deep discussion on the optimal public pension system in China and designed the transition track with detailed methods based on the research of the experience of other countries and the basic condition in China. The chapter 7 is the concluding remarks of the dissertation, which summarized the main research conclusions and suggestions, the research limitations and further research directions etc..