Research On Pension Balance Under The Influence Of Fertility Rate,Delayed Retirement And Life Expectancy

There is a big problem in our current pension balance.The reason of the problem is not only the historical factor of the late establishment of the pension system in the transition from planned economy to market economy,but also the practical reason.The practical reason is that the extended life expectancy of the population leads to the increase of the time and amount of pension received by representative individuals after retirement.On the other hand,in the pay-as-you-go pension system(PAYG)and the Overlapping generation model(OLG),the pension received by the elderly comes from the social security payroll tax paid by the young.The longer life expectancy of the elderly leads to the increase in the number of pensioners and the decline in the fertility rate leads to the decrease in the number of young people paying the Social Security payroll tax.On the one hand receive more,on the other hand pay less,exacerbates the imbalance of pension payments.Delaying retirement has become an inevitable choice.Delaying retirement will increase the time and amount of pension payment,and reduce the time and amount of pension payment,so as to alleviate the contradiction of pension payment imbalance.But in China there is a special problem of generational separation.If retirement is delayed,some people will not be able to afford the work of intergenerational support,and it will reduce the fertility rate.So it’s not necessarily good to delay retirement.Since it is true that delayed retirement reduces the amount and duration of benefits,it is not particularly clear how delayed retirement affects the pension balance because it affects intergenerational dependency and thus fertility.Therefore,it is necessary to consider the relationship between declining fertility rate,longer life expectancy,delayed retirement and intergenerational dependency,and comprehensively analyze the impact of these factors on the pension balance.This paper explores the basic effects of delayed retirement age and fertility rate change on pension balance through the construction of OLG model and parameter calibration simulation analysis,so as to provide the basis for the full text analysis(Chapter 3).Secondly,the life probability is used to depict the change of average life expectancy,which can reflect the change of Chinese population structure better,in order to analyze the impact of the change of average life expectancy of Chinese residents on the change of fertility rate and pension balance(Chapter 4).Then,considering the unique phenomenon of intergenerational dependency in China,delayed retirement will affect the fertility rate by crowding out intergenerational dependency when the average life expectancy is prolonged.By introducing the intergenerational dependency time variable into utility function and budget constraint,the influence of delayed retirement on pension balance is analyzed in a wider range and at a deeper level(Chapter 5).Since then,considering that the pension fund system has not been completely implemented,governments of different levels have to maintain the balance of pension payments by fiscal subsidies.Therefore,the author expands the production function of enterprises and government budget constraints,introduces the structure of fiscal payments and revenue to further optimize the model,and establishes an OLG model including delayed retirement,life expectancy changes and the structure of fiscal expenditure.The effects of delayed retirement,changes in life expectancy and structural adjustment of fiscal expenditure on representative individual pension income and pension replacement rate are comprehensively analyzed(Chapter 6).The main research conclusions of this paper can be summarized into the following three aspects.First,the change of population structure of aging has a great impact on the sustainability of the pension system.Under the condition of exogenous population,delaying retirement age and increasing fertility rate have positive effects on the income level of representative individual pension.Under the condition of endogenous population,delayed retirement increases the fertility rate by increasing the income in old age and reducing the saving level in youth.Delaying retirement increases pension income and pension replacement rates by increasing working hours in old age.In the absence of intergenerational dependency,the increase in average life expectancy has a negative impact on fertility and pension income levels.The main reason is that the extension of average life expectancy leads to the increase of preventive savings during the youth period of representative individuals,which leads to the decrease of fertility rate.Meanwhile,the extension of average life expectancy increases the length of pension drawing,which leads to the decrease of pension income per unit time,and reduces the pension replacement rate.Second,taking the problem of generational dependency into account,the study found that generational dependency can help improve the fertility level and labor supply to alleviate the pressure of family pension.The effect of delayed retirement on fertility depends on the strength of the two effects.Numerical simulation results show that delayed retirement still contributes to the increase of fertility when the average life expectancy is prolonged.However,the negative effect of average life expectancy on pension income and pension replacement rate remains unchanged.It is also found that the capital output share has a greater impact on pension balance parameters,and the fertility rate is greatly affected by the cost of raising children in young age.Third,considering the structure of fiscal expenditure,delayed retirement can improve the representative individual pension income and pension replacement rate;However,the increase of average life expectancy has a negative effect on representative individual pension income and pension replacement rate.Excessive goverment security expenditure reduces the output level by affecting productive expenditure,which has an adverse impact on wage income and capital deposit,which is contrary to the effect of directly increasing social security income,and eventually leads to the decline of pension level.Too high welfare level is not conducive to the long-term sustainability of pension system.The negative effect of prolonged life expectancy and excessive social security expenditure should be fully taken into account in the formulation of economic policies.The current level of pension income and pension replacement rate is still lower.There is still a big gap to satisfy residents’ decent pension.Overall,the reserve of pension is insufficient and the contradiction of pension payment is becoming increasingly serious.So effective measures should be taken to improve the financial sustainable ability of pension.Based on the above research conclusions,the following policy suggestions are put forward:(1)The long-term policy orientation of the future government should be to encourage birth,and the content of family planning policy should also be changed from controlling population growth to encourage multiple birthing and good childbearing.We should lift the one-child policy in a planned way step by step.While implementing the"three-child policy",we should give subsidies and rewards to families who have children.the one-child and the two-child subsidy policy is equally important to improve the proportion of young people in the total social population,and change the structure of future intergenerational population.(2)Generally,the delayed retirement policy which is raising the average age of retirees,has become an inevitable choice to deal with the pension gap,so it is necessary to unswervingly implement the delayed retirement policy.Policymaker should adopt a step-by-step approach to formulate the deferred retirement system,listen to the opinions of different strata,and establish a dynamic mechanism related to the replacement ratio,so as to ease the resistance to the implementation of the deferred retirement policy and reserve time for enterprises and the public to make preparations.(3)The government should support the intergenerational rearing,create conditions for those grandparents who are willing to intergenerational rearing,allow them to retire normally to take care of their grandchildren,so that their children can devote themselves to work,which is beneficial to the family and the society.Policymakers should coordinate relevant economic and social policies with childbirth policies to encourage intergenerational rearing and implement maternity subsidies.(4)In the long-term policy,special attention should be paid to increase the proportion of labor share in the distribution pattern of national income and the remuneration level of workers.In the current income distribution pattern,the labor share has been low and it is difficult to significantly increase in the short term,so it is necessary to increase taxes on capital income to properly increase fiscal revenue.At the same time increase the proportion of social security in the structure of fiscal expenditure,so as to increase the social pension reserve fund.Balanced development of the "three-pillar" model of pension is important.We will develop the first pillar of the government-led basic old-age insurance system,focusing on solving problems such as the low replacement rate of basic pension,heavy financial burden and regional imbalance.Strengthen the second pillar of enterprise annuity and occupational annuity which enterprises and employees work as the main body,focusing on solving the problem of small scale and low coverage of enterprise annuity,and provide tax support for their employees to establish enterprise annuity and occupational annuity;We should vigorously develop the third pillar of individual savings endowment insurance and commercial endowment insurance which individuals work as the main body.We should adopt government tax policy support,individual voluntary participation and market-oriented operation to make them connect with basic endowment insurance and enterprise(occupational)annuity,so as to give full play to their complementary function to endowment insurance.A special entrustment agency for pension funds shall be established under the joint supervision of the ministry of finance,China securities regulatory commission and the ministry of human resources and social security to further increase the proportion of state-owned shares held by pension funds,effectively expand the sources of income of pension funds,and effectively guarantee the steady improvement of investment income of pension funds.The innovation of this paper is mainly reflected in the following three aspects:(1)In the objective function of the model,it is assumed that the utility of representative individuals not only comes from material consumption,but also includes intergenerational support,and then through parameter setting,intergenerational support becomes a manageable problem in the model.(2)By incorporating China’s unique fertility decline,life expectancy extension,delayed retirement,intergenerational dependency and special fiscal expenditure structure into a unified logical framework,a pension balance model with government budget balance based on the independent choice of representative individuals and representative enterprises is constructed.This model can futher analyze the pension balance in the market economy.(3)On the basis of theoretical analysis and parameter calibration,the comprehensive impact of relevant variables on pension balance is analyzed in detail through numerical simulation,which can provide theoretical basis,policy reference and quantitative support for China’s current fertility policy and delayed retirement plan.