Research On The Impact Of Longevity Risk On The Gap Of Basic Endowment Insurance Fund

In recent years,the payment rate of the basic endowment insurance of our country has been adjusted.In April 2019,the general office of the State Council issued the comprehensive plan for reducing social insurance rate,which was proposed to adjust the unit payment rate to 16% from May 1,2019.Since then,the comprehensive payment rate of individual and unit of basic endowment insurance for employees has dropped from 28% to 24%.The basic endowment insurance system of our country adopts the development mode of the combination of the overall account and the individual account.Under this mode,the overall account implements pay-as-you-go mode,and the individual account adopts full-funded mode.In recent years,with the increase of life expectancy of residents and the aggravation of the aging of the population in China,the risk of longevity faced by the basic endowment insurance system of employees gradually appears.This paper studies the impact of longevity risk in different accounts,on the one hand,it is helpful to further understand the risk of longevity;on the other hand,by measuring the change of pension expenditure scale caused by the increase of the expected life expectancy of retired workers,we can provide the relevant theoretical basis for China to cope with the risk of longevity.In terms of research content,in the introduction part,this paper introduces the background of the development of China’s basic endowment insurance system,and combs the literature about longevity risk and the gap of basic endowment insurance fund at home and abroad,puts forward the research methods and ideas used in the research process.The first part and the second part,after defining the relevant concepts,theoretical basis and combing the development process of China’s basic endowment insurance system,put forward the practical challenges in the development process.The empirical part is divided into two steps,the first step is the empirical study of longevity risk.The purpose is to measure the average life expectancy of retired employees.In the process,Lee-Carter model and ARIMA model are used to predict the mortality rate in the future years,and the average life expectancy of retired employees of different genders in 2021-2025 is calculated by using the method of short life table.In the second step,we use the results of the first step to estimate the impact of longevity risk on the gap between social pooling account and individualaccount fund in the basic endowment insurance system.The results show that from2021 to 2025,the average annual fund gap brought by longevity risk to a single 60 year old retired representative male employee’s overall account is 68000 yuan,and the individual account fund gap is 377800 yuan;the fund gap brought to a single 55 year old retired representative female employee’s overall account is 9800 yuan,and the individual account fund gap is 138200 yuan.Finally,based on the empirical research,this paper draws conclusions and puts forward policy recommendations.Based on the research method and parameter setting of this paper,the research conclusions include the following four points.(Ⅰ)The expected life expectancy of retired employees is significantly increased,the average expected life expectancy of60 year old male employees in 2021-2025 is 1.15 years higher than that in 2017,and that of 55 year old female employees is 0.17 years higher.(Ⅱ)There are longevity risks in the overall account and personal account,and the fund gap brought by longevity risk will increase with the extension of the expected remaining life,and the impact on personal account is more significant.(Ⅲ)Lower average wage growth rate is conducive to easing the pressure of longevity risk on fund payment.In the trend of life extension,the impact of changes in average wage growth rate on individual accounts is more significant than that of overall account.(Ⅳ)Delayed retirement can alleviate the payment pressure of longevity risk on individual account in a certain expected life.No matter 60 year old retired male employees or 55 year old retired female employees,when their actual life span is less than 75 years old,there will be a certain balance of individual account pension after delayed retirement.Based on the above research conclusion,this paper thinks that if we want to alleviate the significant impact of longevity risk on the gap of basic endowment insurance fund for our employees,we can start from the following four aspects: first,we can reasonably estimate the scale and composition of longevity risk of the gap of basic endowment insurance fund for employees.Second,we should attach importance to flexible retirement and enhance the adjustability of the system.Third,we should improve the wage level and strengthen the employees’ interests.The fourth is to increase financial input and play the leading role of the government.