The Study On Financing Mode Of Public Pension System In China

After the ‘silvery wave’ appeared in the most developed countries, the aging ofpoplulation was spreading quickly through the developing countries. In China, this prombleis more serious than others. In odrer to deal with the pension pressure, China has set up theSP&IRA in the1990s. Essentially, this is a partial accumulation of financing mode,whichcombines the pay-as-you-go and full-funded mode`s features. However, A lot of problemscaused as this mode run so far, such as hugh transition cost, the empty personal accounts，low-coverage and investment income, and other issues. These problems have seriouslyaffected the normal operation of our country’s public pension system.Therefore, the query onthe SP&IRA had more and more.Based on Overlapping-Generations Model, this article described the content andoperation mechanism of pay-as-you-go, full-funded and partial accumulation of the fundfinancing modes. And then, analysis the factors,which affecting the choice of financingmode, based on theoretical and practical experience in typical countries. Comprehensiveanalysis of China`s Aaron condition, capital market development and size of pension system,SP&IRA is the realistic choice of China, which problems are caused by the model defect,rather than financing mode select error, and eventually put forward suggestions of perfectingthe mode.