The Sustainability Of Urban Employee’s Basic Pension Insurance

As a social insurance，the urban employee’s basic pension insurance is founded andimplemented by the law. According to requirements of the system, qualified enterprisesand employees shall pay pension premiums to the system, when employee’s age reachesthe statutory retirement age, he can receive the basic pension, in order to guarantee thelife that after his retirement. The urban employee’s basic pension insurance is the mostimportant insurance in China’s "five insurance", it plays an important role in protectingthe legitimate rights of employees and maintaining the stability of society.The financial model of China’s urban employee’s basic pension insurance is thepartial accumulation; it includes the social pooling accounts and the personal accounts.However, it is failed to achieve "differential account management" in the reality. In fact,it is the PAYG system under the mix account management and the personal accounts hasbeen running in the "empty account" for a long time. In particular, China’s agingpopulation makes the expenses of basic pension increasing continually and the balanceof fund payments facing an unfavorable situation. Facing this serious challenge, thestudy about the sustainability of urban employee’s basic pension insurance is verynecessary.Due to the current study of sustainability for Shanxi urban employee’s basicpension insurance is almost vacuity, so this paper chooses Shanxi urban employee’sbasic pension insurance as an empirical research object. Then, on a sustainabledevelopment perspective, the writer selects the average wage of workers, pension rate,the number of workers, pension replacement rate, the number of retired workers andfund investment rate as the parameter, builds the fund gap model basing, forecasts thefund gap of Shanxi urban employee’s basic pension insurance in2014-2030. The resultsshow that, from2014to2030, without the government financial subsidies, the fund gapof Shanxi urban employee’s basic pension insurance is increasing. The urban employee’sbasic pension insurance system is not sustainable.Finally, in order to achieving the long-term balance of the Fund’s income andexpenditures, promoting the sustainability of urban employee’s basic pension insurance,the paper proposes a targeted policy and recommendations. First, enhancing theexecutive power of system and promoting the sustainability of urban employee’s basicpension insurance. Second, setting scientific rational parameters and building a developing urban employee’s basic pension insurance system. Third, implementing amultiple investment strategy and enhancing the income of the fund.