A Study Of Legal Regulation On Trust Operations Of Basic Pension Insurance Fund In China

The population of elderly people has expanded since the past three decades. China is one of the countries with the largest old population and the fastest aging pace. Coping with the crisis of aging, many countries took measures to ensure the capacity to pay the pension insurance fund. At present, the operating management of the basic pension insurance fund in China is inefficient because of many problems and its operations are worrying. Hence, it is urgent to find the new ways to preserve and increase the value of the basic pension insurance fund.Trust management is a new approach to the basic pension insurance fund value. Specifically trust management of the basic pension insurance fund refers to the fund managers, namely security agencies across the country, or it entrusts councils of social security fund to deliver the pension insurance fund to the trust investment companies through contrasts, meanwhile supervised jointly by the special fund oversight committee and the China Banking Regulatory Commission, maximize benefits of the basic pension insurance fund in low risk. For the fund, a trust relationship is established between fund managers, agencies of the social security all over the countries as the principals and the trust company or social security fund as the trustees, whose beneficiary are all of the payers for the pension insurance. For personal accounts, because of the private property of individual account, there are two levels of legal relationship. The first level is the contract relationship, principal-agent relation between the insured and the social security agencies. The second level is the trust relationship between the social security agencies and the trust company or the social security fund, in which the social security agencies is the principals, the trust company or the Council for social security fund is the trustees, the beneficiary is the insured. The fund managers also can entrust councils of social security fund to deliver the pension insurance fund to the trust investment companies. Then, the councils of social security fund and the social security agencies are principal-agent relation; the councils of social security fund and the trust company are trust relationship. With serious basic endowment insurance fund to be squeezed occupy and divert and a single investment channel, the basic old-age insurance fund yield is low. And in the process of the trust operation of the basic endowment insurance fund, the trust property independence can effectively guarantee the integrity and independence of the fund and prevent embezzlement. Due to its characteristics of professional financial management, trust has a great advantage in operating costs, operating income and operating risk prevention and guarantees the safety and profitability of the fund. The continuity of trust operations also conforms to the requirements of the operation of basic endowment insurance fund. At present, there are some practices of the trust operating of basic endowment insurance fund and it achieves good operating results. However, the flaws of the trust law in our country and the lack of the specialized law of investment operation management lead to the trust operation of the basic old-age insurance fund unable to maximum effect.Facing with kinds of predicaments including being misappropriated, a single channel capacity of investment, low income, mixed management and operations, lack of specialized regulation of investment management, the basic pension trust, which can solve these problems, is essential to adopt management. Meanwhile, continuity characteristics of trust, the independence of the trust property and professional management and trust operation have made the trust meets the basic pension insurance operational requirements. It is feasible to realize the trust operation of the basic pension insurance, as trust management has great advantages in operating costs, operating interests and operating risk prevention in comparing with the traditional operation mode. The trust management of the pension fund is possible to realize. The establishment of legal system of trust industry, the boom of the trust companies recently, and some good precedents put the trust management into effect. However, the basic pension insurance fund is lack of Special investment operation management method and the trust law has some defects. It makes the trust Operations of basic pension insurance fund unable to maximum effect.The three countries, Chile, Britain and America, have adopted the way of trust in the management of the pension fund. We can draw references and experience from them. First of all, the perfection of legal system is the essential condition of the trust management of the pension fund. It requires establishing a specialized legislation about the trust management of the pension fund and perfecting the relevant supporting laws. Second, fund management and operations departments must to separate, forming a competitive operating mechanism. Third, we shall broaden channels of the insurance fund investment, adopt multiple patterns of portfolio. Analysis of the nature and function of the endowment insurance and choose suitable investment ways. The scope of investment should be strictly controlled when the pay-as-you-go policy implement in trust management; multiple investment approaches shall be adopted when individual accounts of accumulation system are used in the trust operation. Finally, strengthen the government responsibility and supervision.According to the specific situation of China and the experience of foreign countries, the concrete suggestions to improve the basic pension insurance trust management should proceed from three aspects. First, there should be a special regulation of endowment insurance operating law, making detailed regulations for the operation mode of the trust. At the same time, improve the trust of the laws and regulations and ensure the smooth operation of the basic old-age pension trust operations. Determine the subject, investment principles and scope of the trust operations of the basic endowment insurance fund and improve the supervision of the trustee in the relevant laws and regulations. Second, clear the independence of the basic endowment insurance fund and limit the client’s rights reasonable. The third thing to do is to improve the obligation principle of fiduciary, the trustee shall comply with the obligation of investment, guarantee a minimum rate of return and diversification of investment. Clearing the imputation principle is the principle of presumption of fault.