Research On Optimal Contribution Rate For Urban Basic Pension

As the problem of population aging continues to deepen,the burden of urban basic pension increases.However,the retirement age-postponing policy has been put up and the“two children”policy has been carried out since 2015,making reducing the contribution rate for urban basic pension be possible.Considering the aging population represented by survival probability of youth and life expectancy,positive bequest,as well as retirement age extension,the study characterized and solved the optimal contribution rate of overlapping generation model with Nominal Defined Contribution(NDC)public pension scheme from the perspective of social welfare maximization.Besides,we care about how the aging degree,population growth affected by fertility policy,and retirement age influence the result.It is founded that the optimal contribution rate is about 15.62%if the retirement age is postponed to 60 facing the serious aging phenomenon,which is lower than the present level.Otherwise,the optimal contribution rate is positively related to life expectancy,negatively related to retirement age,but the relationship with survival probability depends on the retirement age.It indicates that postponing retirement age will do a lot to reducing the contribution rate as well as some balance mechanism in aging.On the contrary,the fertility policy means a little.Last but not the least,government should be cautious about plausible parameter when making decisions since the contribution rate is the sensitive to them such as personal subjective utility discount factor and social discount factor.Reducing the contribution rate promotes the social output and personal utility as numerical simulation showed.Consequently,we strongly recommend advancing and implementing the policy of postponing retirement age,trying to adopt NDC social pension,then reducing the contribution rate for enterprise in the right way on the right time.