The Actuarial Study On The Implicit Pension Debt In Heilongjiang Province

The Endowment Insurance system is one of the important parts of social insurance and it is also the most basic part in the entire social security system. As the improving of the level of living and medical care, the average life expectancy is growing. The ageing of the population will be the development trend of the global population. The accelerated development of the ageing population will restrict the development of the socio-economic and it will impact on the community's long-term stability. People pay more and more concerns to the reform and development of the Endowment Insurance system. We must resolve the implicit pension debt to ease the pressure brought about by the ageing.Our government failed to bear the implicit pension debt that leads the scale of the implicit pension to increase constantly. Heilongjiang province is one of the famous old industrial bases in China, under the dual pressure of history and reality, its endowment insurance industry is facing severe challenges. To solve this problem, we must calculate the implicit pension debt firstly. Based on this background, we choose to study on the public pension system of Heilongjiang province, making the use of actuarial theory and taking quantitative and qualitative research to empirical analysis the scale of the implicit pension debt in Heilongjiang province and to determine the impact of the strength of the hidden debt do the parameters of the relevant factors . We find the corresponding solutions combined with the specific situations of Heilongjiang province. We hope we can provide the references for further reform and stable development of the Endowment Insurance system in Heilongjiang province, At the same time, we also hope that we can provide references for other provinces and the whole country's Endowment Insurance system .This paper is composed of five chapters:Chapter 1 summarizes a brief background and significance of this topic, recalls the relevant studies and introduces the contents and methods of the papers.Chapter 2 introduces the basic theories of the implicit pension debt. First introduce the reform process of the Endowment Insurance system. Endowment insurance is a form of government guarantee through legal and institutional arrangements, so that the older workers who withdraw from the labor forces would live at the basic livelihood. Our country launched the reforms from the late eighties. The system has been important progress after many reforms have been made. The co-ordination and integration of the personal account system has been generally recognized. The basic Endowment Insurance system gradually expands its coverage and the insured workers became more and more. The supplementary system has also started. There are three pension fund-raising modes. They are pay-as-you-go model, fully accumulated model and partial accumulated model. At present, our country takes the partial accumulated model to raise the social endowment insurance funds. Then the paper introduces the causes and meaning of the implicit debt. It is the post-retirement pension obligations that the country provides for"Old-age Person"and"Middle-age Person"during the transition period of the system. At last the paper introduces the theoretical basis of the actuarial of the implicit debt. Interest theory requires understanding of the related concepts of interest and annuity. Annuity means a series of collection and payment in accordance with the same time interval. It divides into basic annuity and general annuity. We mainly introduce the basic annuity here. Life table theory asks to master the structure of survival model and life table. Life table is the basic to determine the probability of death and survival. The annuity of survival is particularly important in the pension plan.Chapter 3 introduces the current situation of Endowment Insurance system in Heilongjiang province and summarizes the problems that exit in social insurance system at this stage. Firstly introduce the basic framework of Heilongjiang's public pension system. Although Heilongjiang province is working to improve the public pension system, strive to raise the basic pension insurance personal account, make it gradually become more scientific and rational, but the coverage of the endowment insurance is narrow, the size of individual accounts is small. The pension insurance changed from the pay-as-you-go-model into partial accumulated model in 1997 which exposed the implicit debt. Due to historical reasons, it accumulated huge implicit debt in Heilongjiang province.Chapter 4 calculates the scale of Implicit Pension Debts (IPD) in Heilongjiang and has a sensitivity analysis to the relevant parameters of the model. With the growing process of ageing, there will be massive"Old-age Person"and"Middle-age Person"need to receive pensions after retirement. It will bring heavy pressure for the government to pay it off in the next few decades. So there is important practical significance to calculate the scale of IDP timely and accurately. Then, on the basis of existing studies, some actuarial models would be made to calculate the IPD scale. The basic idea is to divide the participants into"Old-age Person","Middle-age Person in work"and"Middle-age Person out of work". We must calculate the size of basic pension for"Old-age Person"and calculate the sizes of basic pension, transitional pension and the regulation for"Middle-age Person in work"and"Middle-age Person out of work". The three parts consist of the total scale of IPD. The model takes into account the changes of dynamics such as the wage increase rate, pension adjustment rate and so on so that the estimation results are more accurate. At last, set the parameters as the actual situation of Heilongjiang. The results show that the IPD scale of Heilongjiang Province was more than 800 billion yuan in 2006. Subsequently, this chapter make a sensitivity analysis to the corresponding model parameters. From the results of the analysis we can see the sensitivity of the relevant parameters from strong to weak as follows: interest rates, wage growth, the average retirement age, the proportion of pension adjustment.Chapter 5 gives some measures to ease the debt problems on the base of the chapter 4. They are: In order to increase the sources of pension fund we can expand the coverage of endowment insurance. We can implement the retirement policy strictly to improve the social worker's burden of pension rates. Repay the debt to ensure the preserving and increasing of fund. Improve the investment yield of the pension fund to strengthen the fund operated in a good situation. The government has an unshirkable responsibility in resolving the IPD problem.After all, the IPD decides the economic development and the long-term stability. Therefore, Measures must be taken to delay or postpone the occurrence of IPD crisis.