Study On The Investment Of China's Pension Funds In The Capital Market

As a nation's stabilizer, the old-age insurance system plays a significant role in healthy development of the society and economy. Since 1980s, china began to reform its social security system in which old-aged insurance system is a major part, but the outcomes were unsatisfied. One of the major causes is ineffective investment of pension funds and single method of increasing its value. To make matters worse, there are more and more old-age people in china and the population is increasing rapidly which leads to a crisis of payment of pension. In order to solve this serious problem, on the one hand, we should speed the reform of old-age insurance system. On the other hand, we should actively seek effective measures to manage and invest the pension funds. For the purpose of sustaining and increasing the value of pension funds, this thesis aims at solving the following problems: Why should the pension funds be invested in capital market, especially in stock market? How should the pension funds enter the capital market? What mode of management we should take? How to supervise?The essay is composed of four parts. The first part analyzes the basic theory of complete and partial funded system, the operation mechanism of pension funds and the management practices in other countries, which try to lay solid foundations for the following analysis. The current situation of management of china's pension funds, the necessity, the feasibility and the obstacles of the entry of pension funds to the capital market are the main problems which will be solved in the second part. In the third part, by comparison of direct and indirect ways of entry to the capital market, the author inclines to the latter, which is more in line with the reality of china's capital and the pension funds. By the same way the moderately-concentrated mode of management will be proved to be suitable. The last part focuses on analysis of the supervision mode and suggests that moderate supervision system will be a better choice which requires co-ordination in supervision among the government, service institutes of accounting and operating enterprises of pension funds.