Automatic Adjustment Mechanisms And Financial Sustainability In Public Pension System

In the background of population aging and economic volatility,pension adjustment reform has become an important tool to promote the sustainability of pension funds.In order to promote the long-term sustainable development of the public pension system,many OECD countries have successively carried out pension reforms.One of the reforms is to introduce an automatic adjustment mechanism.Automatic adjustment mechanisms can adjust the parameters such as contribution rate,retirement age and pension treatment automatically through a set of pre-set indicators.This mechanism is more promptly than the Ad Hoc,and the adjustment range is smaller,more frequent and more predictable.The huge cost and political resistance to major reforms have been avoided.Furthermore,Individuals can also save in advance or extend working hours to deal with longevity risks.However,there are different opinions on whether this mechanism can achieve the long-term financial balance of pension fund and whether it will result in insufficient pension and old-age poverty.This is also the main controversy of this mechanism.This paper systematically sorts out the development background,adjustment methods,adjustment characteristics and classification methods of the automatic adjustment mechanism of OECD countries,and introduces the development process and policy effects of three typical automatic adjustment mechanisms in Sweden,Germany and Japan,and obtains the automatic adjustment mechanism.Operating experience and lessons.On this basis,this paper analyzes the development process and existing problems of the adjustment of basic old-age insurance benefits in China,and analyzes the change of fund income and expenditure after introducing automatic adjustment mechanism of urban employees' basic endowment insurance,and finally proposes optimization.Suggestions on the adjustment mechanism of basic old-age insurance benefits in China is also provided in this paper..The first chapter briefly introduces the research background,research ideas and research innovations of this paper,and makes literature review on the automatic adjustment mechanism at home and abroad.And define some of the concepts used in the following text.The second chapter introduced the development background and development status of the automatic adjustment mechanism of OECD countries.The adjustment methods and adjustment characteristics of the automatic adjustment mechanism of 13 countries were summarized.The automatic adjustment mechanisms in these 13 countries can be mainly classified into two types: the first is to link the retirement age with life expectancy,and the second is to link the level of pension benefits to life expectancy or solvency.This paper further analyzes the basic structure and characteristics of the automatic adjustment mechanism,and classifies and compares the automatic adjustment mechanisms in OECD countries.Since raising the retirement age plan in China has been basically determined but not yet implemented,the automatic adjustment mechanism that links retirement age to life expectancy is not very applicable at present.The analysis of this article mainly focuses on the automatic adjustment mechanism which links pension treatment level with life expectancy or solvency.The third chapter focuses on the three typical countries of Sweden,Germany and Japan,which initially established the automatic adjustment mechanism.The particular design and policy effects of the automatic adjustment mechanism in these three countries are introduced in detail.Sweden's automatic balancing mechanism make the imbalance of assets and liabilities to be corrected immediately,but it also exacerbates the fluctuations in the level of pension benefits.Germany's “sustainability factor” is more moderate and has a protection mechanism that can guarantee positive growth in pension benefits,but the effect on long-term financial balance is not obvious.Japan's “macroeconomic index” is too strict to start,and its impact on long-term financial sustainability is weak.Japan also has a minimum pension guarantee line,but since the automatic adjustment mechanism actually plays a small role,the level of pension protection has not yet fallen below the minimum guarantee line.The system operation of these three countries' automatic adjustment mechanism for about 15 years has provided us with a lot of experience,including the positioning of the automatic adjustment mechanism,the role of the government in it,the relationship between the automatic adjustment mechanism and the indexing adjustment.There are also some lessons include the threshold setting of the automatic adjustment mechanism,the supporting pension guarantee measures,and the reduction of administrative intervention.The fourth chapter mainly introduces the adjustment policy of basic old-age pension benefits in China.Since the founding of the people's Republic of China,the pension adjustment policy was divided into three stages: no adjustment policy period,government temporary adjustment period and government regular adjustment period.The government's temporary adjustment period is mainly adjusted with reference to price changes.The government's regular adjustment period is mainly adjusted with reference to the average wage changes of the employees,taking into account factors such as price changes,payment years,special contributions,and age.On the basis of analyzing the current policy of pension adjustment,this paper proposes the main problems of the current basic pension adjustment policy,including the welfare dependence formed by continuous large-scale adjustment,no clear adjustment formula,and does not reflect the problem of life expectancy extension and fund solvency.Therefore,it is necessary to improve China's basic pension insurance treatment adjustment policy,this paper puts forward the basic principles of improving the policy of adjustment.The fifth chapter refers to the setting method of the automatic adjustment mechanism of OECD countries,proposes two alternative models of China's automatic adjustment mechanism,conducts actuarial simulation,and compares these two schemes from two aspects: financial sustainability and treatment adequacy.Policy effectiveness.The first option is to index the pension and incorporate the change in life expectancy into the initial pension calculation formula.The second option is to introduce a “sustainability factor” that incorporates changes in contributions and recipients into the pension benefit level adjustment formula.Under the two schemes,the results of the calculation of the income and expenditure of the basic pension insurance pool fund in 2018-2050 show that both schemes will increase the current balance and accumulated balance of the basic pension insurance pool fund,and the second adjustment effect is excellent.In the first option.However,on the whole,the impact on the balance of funds and funds is not very large.The time for the current deficit and accumulated deficit under the two schemes has not changed.Finally,this paper puts forward some suggestions for optimizing the adjustment policy of basic old-age insurance benefits in China.The automatic adjustment mechanism,as an expenditure-side reform,can slow down the accumulation of pension debt to a certain extent and cope with the aging of the population.However,it cannot fundamentally solve the balance of payments of pension funds,nor can it replace the main parameter reform.In the process of establishing an automatic adjustment mechanism,China must not only understand its development background and basic structure,but also distinguish its difference from the government's temporary adjustment and index adjustment,as well as its operational effects and possible problems.This paper uses comparative institutional analysis,case analysis,literature research,actuarial simulation,introduces the characteristics and classification of automatic adjustment mechanism,uses raw data to analyze the operation effect of automatic adjustment mechanism in Sweden,Germany and Japan,and adjusts based on China's treatment.The method is to optimize the calculation and try to provide reference for the establishment of automatic adjustment mechanism in China from different angles.The innovations of this paper can be summarized as the following three points:Firstly,this paper refines the design and characteristics of the automatic adjustment mechanism of pensions in OECD countries,and classifies and compares the automatic adjustment mechanism of typical OECD countries according to trigger factors and adjustment parameters,and highlights the actual adjustment mechanism of Sweden,Germany and Japan.running result.This is a field in which domestic scholars have relatively few studies.The topic selection and conclusions of this study have certain cutting-edge and innovative value.Furthermore,this paper conducts an empirical analysis of the effects of the automatic adjustment mechanism of OECD typical countries.And selects three countries that are the first to establish an automatic adjustment mechanism: Sweden,Germany,and Japan.Innovatively use the actual data and adjustment formulas in the process of automatic adjustment mechanism,and empirically analyze the operation effect of its automatic adjustment mechanism,and separate the adjustment effect of its automatic adjustment mechanism.It has important reference value for the improvement of China's pension self-adjustment mechanism.Finally,based on the design of the automatic adjustment mechanism of the OECD countries,this paper adjusts the current policy based on China's pension benefits,and strives to simulate the design of the automatic adjustment mechanism in China's pension benefits adjustment.The policy effects of different programs were discussed initially,and policy recommendations for improving and optimizing were put forward.It will help to optimize the adjustment plan and adjustment mechanism of China's pension benefits.