A Research On Investment And Risk Management Of Employer Pension Fund

One of the important influences in the social security reforms is to develop employer pension energetically, which aim to resolve the population-aging crisis and relieve the government' s burdens of retirement benefit. However, the development of employer pension needs perfect legal systems, effective management system of fund and tax preferences. Among those factors, the key is how to manage employer pension fund normatively and invest it efficiently. For this sake, Chinese government constituted a series of acts in 2004. However, after the implement of these acts, some questions arise, for example, whether the management model of employer pension funds required by the rules is suitable to Chinese especial circumstances, what affections this management model will exert on the investment of employer pension funds, whether this management model is really efficient. The answer to this series of questions is the main content of this paper.Besides introduction, this paper consists of five chapters. The second chapter introduces the concepts and the frame of system relative to employer pension. The third chapter explores the choosing of management model of employer pension fund. Thefourth and the fifth chapter explore microcosmic investment operations and risk avoidance respectively. The sixth chapter analyses the investment efficiency of employer pension fund on the basis of empirical simulation.A core that runs through the paper is to manage employer pension fund efficiently, around which this paper fully analyzes the management of employer pension fund, from macrocosmic system to microcosmic operation, from academic analysis to empirical checkout. According to these analyses, this paper put forward the following new points, while absorbing other people' s academic fruits.First, there is not a management model that is fit for every country. So, every country must take the especial surrounds of itself into account when choosing management model for employer pension fund, and it must also consider the system conditions that every management model needs. Now Chinese employer pension fund is transforming its management to a trust model, in the process of which Chinese government must make rapid strides in breeding the conditions that benefit the development of trust management model, including the multi-level legal systems, the perfect informative mechanism, efficient internal governance mechanism and credible market surrounds.Secondly, financial derivations are the efficient means to avoid the investment risks of employer pension fund. And when we employ such option strategies as floor tactic, collar tactic etc. to avoid the investment risks, it is not necessary for employer pension fund to trade directly by the financial derivation markets. Instead, employer pension fund can design an option-like contract by arranging the contract properly and pricing it by an especial formula.Thirdly, employer pension fund can improve the return of investment by outside management, which takes advantage of specialization of investment. However, this investment management model would also bring about some additional costs because of the presence of principal-agent problem. So, the essential of outside management is to obtain larger income with smaller costs than in-house management. And it is the comparison between income and cost that determines which investment management model is more efficient than the other.