China's Basic Social Pension Insurance Personal Accounts Risk And Its Control

This thesis studies the risks of personal accounts in the basal pension plan in China. While accepting its advantages, we should have a consciousness of risk. Through analyzing in detail the source of risk, we put forward corresponding measures to avoid them. We should make best use of personal accounts in elderly life. This paper is mainly divided according to expounding problems, analyzing problems and resolving problems. Besides introduction, it consists of four chapters; the main contents of each chapter are as follows.The first chapter shows variety of risks faced by personal accounts in the basal pension plan in China:(l) macroscopic risks, implying the impact of social economic circumstance and aging of population on the design and running of the system;(2) systematic risks, indicating the risk derived from the designing and executing of the system, mainly including the problems of "empty accounts" and coverage.(3) management risk, risks existing while we manage pension fund, especially in collecting fee and paying.(4)operating risk, including risks of principal-agent and risks of profit rate.In the second chapter, we analyze reasons of each kind of risk. Firstly, there are several objective risks because of instability of political and economic policies and uncertainty of economic factors. Secondly, the system only covers employees in cities from the very beginning. As a result, coverage become low and collection of fee become difficult. At the same time, while we run the system, we can not settle the cost of transformation. So personal accounts have been empty all along, and a lot of systematic risks have appeared gradually. Thirdly, because managing level is very low, there are plenty of risks in macroscopic and microscopic management. Finally, because of asymmetric information, there is moral risk in principal-agent problem. In China, capital market has a lot of defects and financial tools, on which we invest pension fund, are limited at present. So risk of profit is high. In the third chapter, we put forward several suggestions on controlling risks. (1) The government should regulate macroscopic economy by fiscal and monetary policies to create a satisfactory surrounding for development of pension plan; (2) If we want to minimize systematic risks, we must fill up the empty accounts, at the same time extending coverage and enhancing level of mutual-aid (3) We should improve management of personal accounts gradually in macroscopic and microscopic aspects by accelerating legislation of social security and establishing clear relationships of every sector and so on. (4) We should establish the trust-agency system adapted to mark economy to avoid risks of investment. We should modify the system of revealing information, enhance supervision and management of pension fund, carry out variety of investment and establish evaluation system of risks to improve profit of investment gradually.In the end, we point out innovative aspects of this thesis and several problems to be modified on.