Legal Analysis Of The Social Endowment Insurance Individual Account Fund’s Investment And Supervision

As an important component of Social endowment insurance fund system(SEIFS),individual account fund is not only the economic resource which is supporting thewhole system but also the material foundation to make sure the system run steadily.Whether it can run safely concerns the success of our social security, economicsecurity as well as the stability of nation. Ministry of Human Resources and SocialSecurity of the People’s Republic of China (MOHRSS) made an declaration in April,2012, which said that they will continue to make a though survey about investmentoperation modes, management mechanisms, policies and measures of the pensionfunds with other departments related. Meanwhile, they will also draw up basicregulations to manage the investment on pension insurance fund, Promote thepreservation and appreciation of the fund as well as to protect the vital interests ofevery insured person. It’s no doubt a signal of diversification of pension insurancefund investment.Clauses related its management and regulatory need to be standardized urgentlysince individual accounts is the most energetic and flexible funds. We can firstlyanalyze the existed investment operation modes and corresponding legal regulatorysystem due to the natures and characteristics of individual account funds.In contrast, laggardness of legislation, regulatory fragmentation, independence ofregulatory agency and unclear functions of administrative supervision are all realitiesof the current situation of individual accounts fund in China is on hand, on the otherhand, considering that the systemic risk of financial system, risk from symmetricinformation and risk of moral hazard are all challenges we cannot predict, we have tomake a good definition of rights and obligations. That is to say, draconian regulationmode is the choice at the present stage since the reality of our financial environment istaken into account while at the same time regulatory restrictions is needed for theinvestment operation of individual account funds due to the mode choice and accessconditions. Then the final regulation to make it perfect is that in terms of individualaccount fund investment operations conducted under the supervision of the legalsystem’s improvement.