Redistribution Effect Of Old Age Social Insurance And Impact To The Retirement Decision

Old-Age Social Insurance System is the main content of modern social welfare system, and its target is to prevent risk, income redistribution and avoid poverty. According to difference in financing mode, Old-Age Social Insurance System is classified Fully-Funded Scheme and PAYG Scheme. All the time discussions about advantage and disadvantage of those two basic schemes mainly focus on the fields such as return on capital, labor supply effect, system operation cost, saving effect and income redistribution effect. Chinese current Old-Age Social Insurance System is binding mode of integration account, which means a combination mode of PAYG Scheme and Fully-Funded Scheme.This article analyzed and discussed income redistribution effect and influence on PAYG Scheme of Chinese Old-Age Social Insurance System.Scholars in developed country have mad in-depth studies on effect and function of welfare system in all aspects of economy since 1950s. Though so far intensive debates have existed in different fields (for example, influence on labor supply, income redistribution effect and financing mode, etc.), their research methods have becoming increasingly mature and perfect. However, Chinese Social Insurance System started late, valid statistics data were very scarce, which resulted in backward research in social insurance system. Therefore, it would be helpful to analyze and survey Income Redistribution effect and influence on labor policy of Chinese Old-Age Social Insurance System by analyzing foreign literature, referring to foreign mature and general methods.Relevant simulation model is build up through analyzing some aspects such as payment, payout methods of Chinese Social Insurance System. Furthermore, Income Redistribution effect is analyzed under different interest rate and wage growth rate through estimating fee payment ratio, internal rate of return and payback period. It is generally considered that Social Insurance System has a strong positive effect on Income Redistribution and is beneficial to promote social justice.This article suggested that maximum lifetime income is the optimal condition for retirement decision, and simulation model estimated what the maximal retiring age is under different discount rate and wage growth rate. The retirement age is brought backward as wage growth rate increased and brought forward as discount rate increased. Influence of Social Insurance System on retirement decision depends on prevailing microeconomic fundamentals.