The Study Of Fairness And Efficiency For Pension Reform

Based on experience of China’s pension reform, this article constructed a research framework about fairness and efficiency, which was used to analysis the affects of population structure, income distribution structure and the economic environment on pension reform. The fiscal sustainability, equity of distribution and macro economic effect were the most important things in this study, and to provide theoretical support and policy reference for pension reform was the basic goal.Central issue of this paper includes six aspects:(1) the history of pension reform at home and abroad, and the background, resistance and existing problems also could be considered;(2) allocation fairness, incentive mechanism, budget balance and macroeconomic effect of different pension system;(3)the difference between generations, urban-rural, and different gender, and the strategy to narrow the individual difference;(4) the complementary effect and substitution effect of equity and efficiency, and the decision-making principle of dynamic time consistency of reform;(5)economic effect and social effect of merger and retirement delay;(6) economic effect and political feasibility of generally delay and classification delay.Pesnsion was a system of redistribution very closed to public goods, and fairness was its pursuits.The fairness discussed in this article was not completely equal, but allows some differences.The expression mechanism of fairness, influence of different policy on distribution, and the differences between urban and rural, gender and ownership were the focused points discussed in this paper, and give support to build a wide coverage, low individual differences and portability pension system was the main goal of this study.However, when pension system confronted with aging problem, relative to the equal distribution that induced the system to the collapse, enhance the fiscal sustainability and reduce the negative effect of system was more important.How to adjustment the structure and parameters of pension system to cope with the change of population environment, economic environment and the condition of income distribution was the main discussion points in this paper, and the strategy to establish budget balance and low negative economic effect pension system also be provided.Actually, there was a complementary and substitution relationship between fairness and efficiency.Just follow the principle of dynamic time consistency, and consider the maximization of social welfare and individual utility at the same time, the allocation fairness and fiscal sustainabili-ty can be improved actually.The main results of this study as following:(1) To deal with aging problem and improve the fiscal sustainability was the direct cause of current pension reform, and marketization, urbanization, opening to the outside world nd the expanded gap between rich and poor were the main background of pension reform. After the pension system in China from pay-as-you-go to commission account system, the more efficiency three pillar system was the next destination. At the same time, the coverage of pension system was constantly expanding, as well as the level of overall distribution and individual responsibility was constantly enhancing. Right now the biggest problem of China’s pension system were the empty account in personal account and social pool account, as well as the individual difference, and to build a wide coverage, sustainable, and low individual differences pension system was the direction of pension system.(2) Equity and efficiency was the most important aspects of pension system, to maximize the social welfare and individual utility was the goal of pension reform. If the structure and parameter of pension system adjusted under the principle of dynamic time consistency, will be better to coordinate the relationship between fairness and efficiency. Just the pension reform can improve the social welfare and personal investment yields, then we can say it conformed to the principle of dynamic time consistency.(3) The substantial fairness can be researched from individual and institutional aspect. Volatility of population structure, heterogeneity of individual labor productivity and unbalance of labor market were the key factors which influence the justice of pension system.When the heterogeneity of individual labor productivity was too big to enhance unemployment rate, implement differentiate capture was good to expand the essential fairness from individual dimension. When aging problem caused a decrease investment return and a unsustainable fiscal condition, reduce the overall ratio is beneficial to improve the substantial fairness of pension system from institute dimension.(4) Pension difference between urban and rural, gender related to employment ability and employment environment.Breaking the dual structure, and implementing the supporting education policy, industrial policy, employment policy and pension policy, can narrow the pension difference between urban and rural. Moreover to implement compensate employment policy and pension policy can narrow the pension difference between male and female.(5) The main melody of pension reform was to set up and improve the commission account in China.The ability of commission account to cope with aging was above pay-as-you-go but below fund system, and return to investment and allocation fairness was better than fund system but worse to pay-as-you-go. For the rising labor productivity and the expand gap between rich and poor, to enhance the ratio of overall distribution and highlight the fairness of distribution was the right choice.(6) To cope with pension deficits, the effect of merger was better than retirement delay. Let the employees of public sector perform and enjoy the same obligation and pension rights as the employees of non-public sector. Not only good to solve the problem of accumulated pension deficits, but also have no negative effects on staff pension burden and employment of new labor. So, the strategy of retirement delay should be put under the first consideration when government want to implement a pension reform.(7) In order to deal with pension deficit, also need to consider the condition of labor market when choosing a retirement delay strategy. For the degradation effect and crowding out of employment, mild delay was good than depth delay, classification delay was good to common delay. However, the effects of retirement delay associated with human capital, pay more attention to the skill training and academic education of the worker will let the policy of retirement delay has higher economic efficiency and political feasibility.