A Comparative Study On Operating Mechanism Of Non -contributory Pension Scheme

Non-contributory pension scheme can provide basic pension to all residents in old age within the plan, without payment, without considering income status and occupation type of plan members. The World Bank has recommended non-contributory pension scheme to the world in 2005, which is set as "zero pillar" in five-pillar pension model. Non-contributory pension scheme has remarkable results in expanding coverage and reducing the poverty rate of older age groups. It’s many advantages, such as management costs are relatively low; It can be flexibly adjusted with the family structure, rapid changes in marital structure and economic development. In addition, by reducing the link between occupation, level of wages and retirement income, non-contributory pension scheme can strengthen the social contract between the government and the people. This will contribute to the building of social cohesion.In recent years, with the development of China’s industrialization, urbanization and population aging, pension issues facing a lot of pressure. For urban and rural residents, the need of pension system is particularly urgent, because mostly they aren’t fixed job and a stable income. However, our pension system is quite imperfect. On the one hand, the basic old-age social insurance system’s coverage is too narrow, currently only covering the employees of corporate and institutions. There is still a gap for urban residents and the coverage of rural social insurance system is particularly low. On the other hand, the minimum living standard security system for urban and rural residents is almost missing, so our country urgent need to establish a sound pension system covering both urban and rural residents. The pilot work of social insurance for rural and urban residents respectively began in June 24,2009 and June 13,2011. Both systems provide basic pension to the elderly, who are over 60 years of age. This represents non-contributory pension scheme board stage of the Chinese pension system.China intends to build basic social security system covering both urban and rural residents by 2020. In order to achieve this goal, in the early establishment of non-contributory pension scheme, it is necessary to conduct a comprehensive understanding about the evolution and operation of this program in the world. This can promote China’s old-age security work into a higher level.This paper consists of Introduction and five major sections. The main content and view of each part is as following:Introduction:To discuss the research purpose and significance of this paper and to summarize briefly those related literatures on domestic and overseas operating mechanism of Non-contributory pension scheme.Part one:The rise and development of Non-contributory pension scheme is given a reasonable explanation of the theory from theoretical discussion. First of all, this paper defines the pay cost model endowment insurance program and the basic connotation of the category, and describes the range of pay cost model endowment insurance program’s rise and development situation. Since income redistribution theory, the theory of socialist government for the father loves the public products and three basic theories of theory, this paper analyzes on the pay cost model endowment insurance program and the cause of development of the rise.Part two:Summarized Non-contributory pension scheme’s implementation of the countries around the world, this paper obtains the general operating mechanism of the scheme. Based on the implementation of non-contributory pension scheme in the world, this paper summarizes the operatipn mechanism, through the five aspects:coverage, financing mechanisms, benefit eligibility conditions, the level of pensions. We know this paper show non-contributory pension scheme completely and clearly.Part three: This part summarizes social and economic benefits which be generate during non-contributory pension scheme’s implementation. Social aspects: non-contributory pension scheme can be effective in reducing poverty in older age groups and their families indirectly; can improve children’s education and nutrition levels; can protect the human rights of the old people; can promote family harmony and gender equality; can enhance social cohesion. Economic aspects: non-contributory pension scheme is effective to enhance the spending power of poverty in old age groups; and this scheme gives the poor areas of the development of market economy an important driving force; but the means-tested non-contributory.pension scheme may reduce people’s enthusiasm for work.Part four: The paper selects three typical non-contributory pension scheme: Mauritius, New Zealand and South Africa. And it gives description of the course of development and specific operating mechanism, in these three countries. Next, the paper analyzes and summarizes the many constraints of the introduction of non-contributory pension scheme, concluding political, economic, social, demographic aging. At last, this part summed up the constraints of these three typical national non-contributory old-age security schemes factors.Part five: In this part, the perspective of studying non-contributory pension scheme from the World turning to China. First of all, combined with the status quo of Chinese urban and rural old-age security system, the paper demonstrates the necessity and feasibility to establish and improve non-contributory pension scheme in urban and rural areas. Then, this article introduces the practice and exploration of non-contributory pension scheme for urban and rural areas in China. I put forward a number of problems during the operation of the scheme. At last, I draw on relevant international experience, and recommend some measures.This paper may have two innovative points: 1 this paper has a more comprehensive, detailed study of the non-contributory pension scheme for a large number of international practical experience, so it maybe has the pioneering; 2 Combined with international experience to China’s non-contributory old-age security scheme, the paper gives a number of recommendations to tackle the problem, may have some innovative.However, because of the level of the author and the difficulties in the process of collecting data and materials, the paper lacks of empirical research on the non-contributory pension scheme for the urban and rural residents, which is the inadequacy of this article. I hope it can be improved in the later study and work.