Intergenerational Justice And Social Old-age Insurance Systems

Intergenerational equity of social old-age insurance is not only an economic issue,but also a distributive one. From intergenerational justice perpective, this dissertationdiscusses the debates on intergenerational equity of social olg-age insurance and itsreforms, compares three intergenerational justice principles of social old-age insuranceand their applications, which are repectively offered by theories of libertarianism,justice as reciprocity, and justice as fairness. Proposes an intergenerational justiceprinciple based on needs satisfaction. And by big data analysis on china’s basic old-ageinsurance system for urban employees, gives some suggestions for improvement.The main point of intergenerational justice of social olg-age insurance is how todistribute contributions，benefits and risks among corhorts. There are two main standsabout this issue and pension model reforms. Libertarians and radical reformers thinkthat with ageing influence the popular PAYG (Pay-as-you-go) model in many countrieshas shown sustainability crisis and intergerational inequity. They advate for principle of‘desert’ and equivalent ratio of benefits to contributions, and suggest actuary equity andtransition to FF (Fully funded), NDC (Nominal defined contribution), and more privatepensions. Egalitarians think that intergerational justice of social old age insurance notonly means sustainability and equivalent ratio of benefits to contributions, but alsomeans ‘need’,‘dignity’, social solidarity and intergerational interdependence. They suggest maintaining PAYG and adust parametes with in it. China’s basic old-ageinsurance system for urban employees combines PAYG (social pool account) and FF(personal account). The debates on its intergerational equity are similar with the debatesabove. This dissertation states that the essential function of social old-age insurance isintergenerational supporting and satisfying basic old-age needs of each cohort, which isthe same for all pension models. So the improvement of pension equity does not dependon model chices, but on how to distribute contributions，benefits and risks amongcorhorts justifiably and reasonbally.Three intergerational justice theories offer three intergerational justice principlesfor social old-age insurance. The principle from libertarianism is Lockean proviso,which requires each cohort supports itself, and claims ‘freedom’,‘rights’, and ‘desert’.The principle from justice as reciprocity also gives some reasons for libertarians’suggestions, which treats pension systems as economical and rational contracts, andclaims equivalent reciprocity between generations. This principle also means ultimatelyeach cohort supporting itself and ‘desert’. While egalitarians base their argument onjustice as fairness. They try to justify PAYG with difference principle of Rawls, andargue the justification of compensation to the worst off generations. This dissertationstates that each cohort supporting itself can not be realized because of the fact thathuman always support each other and the objective rules of social and historicaldevelopment. Therefore the principles from libertarianism and justice as reciprocity arenot sutible to pension intergeratinal cases. While the egalitarian argument from thedifference principle dose not either successfully offer justifiable bases forintergenerational justice of pensions, but their arguments on intergenerationalsupporting and risk sharing are convincing to some extent.Based on theories of human needs from Marxism and other theories, thisdissertation proposes an intergenerational justice principle based on needs satisfaction, and explains the specific requirements in real pension cases. This principle claims thateach cohort’s old-age basic needs within its lifecyle should be satisfied, and in order tosatisfy the needs unequal distribution of contributions and benefits between cohorts arejustified. While for sustainability and insuring the needs satisfaction of future cohorts,the principle of desert is also necessary to maintain contributions and benefits roughlyequal. Similarly China’s basic old-age insurance system for urban employees includes‘need’ and ‘desert’ at same time. According to the principles, it is justified to providesufficient pensions to satisfy the basic old-age needs of generations who had retired orjoined in before the system was set up or transformed; but according to the principle ofdesert, the historical debet caused by model transition should be paid by government.With the longevity risks, delaying compulsory pension age is the requirement from‘desert’, while the cost from low fertility risks should be shared between cohortsaccording to ‘needs’. The policy implementation diviations ruins the ‘desert’ principle,so strengthening policy implementation can helps pension sustainability.Finally according to intergenerational justice principle based on needs satisfaction,this dissertation gives an empirical study on China’s basic old-age insurance system byanalysis on big data from several typical areas, which covers nearly10millions people.The big data study shows that supposing pensions benefits would not increase in thefuture, the paid and unpaid historical pension debts of ‘old people’ who had retiredbefore1997in A province is297.287billion yuan. Although this helped to satisfy basicold-age needs of these generations, but harmed sustainability and intergenerationalequity. In practice lots of policy implementation deviations exist, especially indeveloped areas, which include actual social pool contributions and payment base lowerthan policy requirements, widely early retirement, and lots of people contributing lessthan15years. These deviations break the ‘desert’principle, and are harmful to satisfyingthe basic old-age needs of future generations. From an ayalsis on the age distribution of workers and pensioners, the dependency ratio of the pension system and itssustainability situations are different among areas, which are better in developed areasthan in underdeveloped areas. This dissertation suggests that the transitional debtsshould be paid by government, but considering the financial pressure to make personalaccounts solid and the risks of investment, transition from the personal account to NDCis possibly an alternative. The most important improvement should be on policyimplementation, especially for developed areas. Measures should be taken to strictlyprevent and stop the actions of breaking rules, and key measures should be on theimplementation of social pool contributions, payment base, contribution years andretirement age policies. In ageing trends, the current retirement age should be delayed,while at the same time the national pooling of basic pension is necessary to balance thedefferences of sustainability in different areas, but fistly the policy differences should becanceled, especially for developed areas.