The Analysis On The Factors Affecting The Variation Of The Solvency Capacity Of China’s Basic Old-Age Insurance For Urban Employees

Pension policy is an important policy which is beneficial to the people’s livelihood. Since the foundation of the pension policy which is the combination of the fund and individual account in1997, the sustainability and solvency of the pension system has been the concern of the public. It is generally believed that the solvency of pension insurance system is facing great pressure. Therefore, research on what kind of factors have influence on the pension solvency, and thus improve the solvency of sustainable development is of great significance to our country pension system.According to the opinions of the scholars at home and abroad, scholars from all walks of life mainly consider the constraints of endowment insurance solvency is the "old before getting rich", and the research methods mainly use the qualitative analysis and concentrate on the system design deficiencies, but few scholars use quantitative analysis method, including the effects of macro economy and institutional design. The significance of this study lies in the use of quantitative research method is precise, which explores the impact of the factors inside and outside of the pension system, providing reasonable suggestions to the improvement of the system’s solvency. This article’s sections are as follows:The first chapter:introduction. This section explains the background of this paper and describes the development of the pension system and the condition of the coverage of the pension system, so as to put forward to the motivation of this study.——Pension coverage is small, which leads to its limited solvency, so it is necessary to explore the factors affecting solvency, in order to improve its solvency.The second chapter:literature review. This part summarizes related researches on pension solvency factors, from both home and aboard. On the basis of drawing on the advantages and making up for the shortages, I propose the research method of this article is the combination of qualitative study of international and inter-provincial comparative analysis and quantitative empirical study. While,the dependent variable of this study, which is used to measure the solvency is system dependency ratio.The third chapter:descriptive statistical analysis of the factors affecting the solvency of the pension insurance. First, this chapter makes a comparison of the possible influential parameters out of the pension system between home and aboard, pointing out that these parameters in our country are not serious. Then I make a Chinese provincial comparison of solvency indicators, finding out that, the solvency of our current pension system is suffering great pressure, furthermore, there is great development gap among these provinces. Finally, I analyze the pension system systematically and point out that, the existing problems in our country’s pension system are excessive category, unfairness of payments, which leads to negative incentives.The fourth chapter:empirical analysis of factors affecting the solvency of the pension insurance. This article chooses31provinces’data from2006to2011as the research object and establishes regression model to explore the factors influencing the pension solvency in China. The dependent variable of the model is the system dependency ratio to measure the pension solvency. The possible independent variables are:the growth rate of GDP, the growth rate of the proportion of the productivity of the third industry in GDP、the entire population dependency ratio、urban employment population ratio、urban residents per capita disposable income ratio、the pension replacement rate and contribution rate. The test results show that, the growth rate of the proportion of the productivity of the third industry in GDP、urban residents per capita disposable income ratio、pension replacement rate are proportional to the system dependency ratio and the pension contribution rate is inversely proportional to the system dependency ratio. While he growth rate of GDP、the entire population dependency ratio、urban employment population ratio have no significant relationship with the system dependency ratio. Finally, through the comparison of the three provinces Liaoning、Jilin、 Heilongjiang in Dongbei, which have high system dependency ratio and the three provinces Jiangs、Guangzhou、Fujian in eastern coast, which have low system dependency ratio, this chapter analyzes the reason of why those independent variables are significant or not.The fifth chapter:conclusions and policy recommendations. On the basis of the systematic analysis of the previous chapters, the paper points out that the long-term targets of the improvement of pension solvency are the adjustment of industrial structure and narrowing the gap between rich and poor, while the short-term methods to improve solvency are reducing the pension contribution rate, increasing the overall plan level of pension policy and strengthening the role of fiscal subsidies.Innovation and shortcomings are as follows:The innovation of this paper is that, on the basis of comprehensive comparison both in China and aboard and detailed analysis on the current pension policy, the paper uses the data of recent years, which can reflect the real condition of the pension solvency and taking the policy change in2005into consideration. Further, the paper adopts system dependency ratio, rather than pension coverage rate to measure pension solvency and makes strict empirical study. However, the inadequacies of this paper is due in2005the pension system changed greatly, so I only use the data since2006, resulting in less data.