Research Of Sustainable Development Of China’s Pension System

The implementation of social security is a symbol of social civilization and human progress, and the old-age security system is an important part of social security. From the historical point of view, a well-designed pension system plays important role in promoting economic development, social harmony and political stability. It has been more than100years since that the Germany government established the first mandatory public pension plan of the world in1889. More than160countries and regions have established pension system, and their governments assume the duties of design and implementation of pension system without exception. Particularly, the public pension plans held by governments are the most reliable guarantee for old-ages in the basic needs. Also, China’s pension system is an important component of old-age security system in the world.China’s public pension system has also experienced several adjustments since its inception in1951, in order to constantly adapt to the economic development level and changes in market conditions. In1997, the public pension system reform has achieved a major breakthrough. In the light of other countries and the World Bank recommends, China established the current pension system model, which is combined by social pooling and individual accounts. After several years of practice, some problems in the social insurance system emerged. Although the system was originally designed well, but the difficulty and complexity in the pension system processing has been far beyond the initial expectations of its designers. There are some difficult problems in this system to overcome, making the current pension system model into a quandary gradually. In2005, the pension system achieved another significant advance reform. The integrated system model combined by PAYG system and accumulation system, determined respectively by payment and contribution, was established. Under the new system, the pension system is still relatively fragile, contradictions in which become more prominent in the face of common global issues of aging. First, it is expected that the pension insurance will cover the urban and rural completely during the period of "Twelfth-five", especially in the first half of it. The government should take responsibility to do the individual and basic pension account, which inevitably causes great financial pressure for Chinese government. Second, the issues of replacement rate and security level have been weak links in China’s pension system. Current pension savings will be quickly reduced or even make ends meet with the rise of replacement rate and security level. Also, the pension system of social security of migrant workers is a unique issue. The key issue of policy for next step should be that, whether we should make the migrant workers into the pension system for urban residents with the expansion of urbanization, or establish new model of pension insurance in rural areas in order to respect the account properties of migrant workers. For China, pension system sustainable development becomes more prominent and acute. On the basis of a detailed study in research and reform status of global public pension system, this paper analyzes the difficulties and shortcomings of China’s pension system comprehensively, and thus build a theoretical model to compare the economy growth effects and welfare effects between different pension system models. Then, this paper focuses on the applicability of different models, and then proposes the main ideas and suggestions for pension system sustainable development on the basis of the National Social Security Fund and other national reserved fund.This paper includes7chapters. Chapter1introduces background and significance of this topic, sets some important concepts in the full text, and introduced related research at home and abroad. Chapter2is pension system development status in China including urban, rural pension system, and pension system reforms in the world. Chapter3measures implicit pension debt in the transition of China’s pension. On the basis of it, this chapter builds the calculation model, estimates the implicit pension debt. Chapter4discusses the benefits and replacement rate of China’s pension, and proposes reform program treatment for China’s pension under the estimation of optimal degree. Chapter5analyzes the existing expenditure pressure and financing issue of our pension, including the expenditure size and pressure of China’s current pension under the situation of absorbing the migrant workers into the pension system, and funding program. Chapter6proposes the construction and development programs for the National Social Security Fund based on National Pension Reserve Fund and operational and sustainable development initiatives for the pension system. Chapter7enhances the significance of the pension system sustainable development. The pension system has a significant role in promoting consumption structure and scale and reducing the gap in income distribution, therefore preparing a good social and economic environment and policy foundation for accelerating the economic development pattern changing.Overall, this paper has four innovations. The first is innovation of proof methods. This paper effectively adheres to the combination of qualitative and quantitative methods, avoiding falling into a insurance type of actuarial technical doctrine and a review-type of empirical research. The second is innovation of the demonstration content. This paper re-defines the nature of the National Social Security Fund in theory, and put forward the concept of national reserve fund. The third is innovation of conclusions. This paper seeks to link the pension system with the macroeconomic environment, not only highlights the significance of the pension system, but also provides an effective way to change the current economic development pattern.In addition, due to the ability and knowledge, there are still a lot of shortcomings and deficiencies. Firstly, the relevant data is lack in the article. Because of the hysteresis characteristics of China’s financial data, only class-level data are accessible. So some of the research in this article is only stay on the theoretical analysis, it is difficult to do empirical test, resulting in many of the goals can not be carried out, to some extent, affect the persuasiveness of the article. Secondly, the research methods are also defective. Research in this paper is too dependent on time-series approach, therefore the lack of effective cross-sectional data analysis tools, resulting in a number of targeted research are not carried out. Thirdly, for many important conclusions, this paper presents only preliminary ideas and programs, which are far short of the level of operation, affecting the availability of this paper.