Research On The Role Of State-owned Assets In Improving The Payment Capacity Of China's Old-age Insurance

China had established pooling and individual account combination system of pension by means of two important reforming both in administrative level and in system mode. But the pension transition costs have not been resolved in the reformation process, meanwhile, China's pension deficit would arise along with the acceleration of aged tendency of population and the pension can be paid would be less than actual demand which is required to achieve a desirable substitution rate in the future. Opening up new channels of funds to guarantee the sufficient solvency of pension system is the key factor to China's old-age insurance. There are two kinds of ways to improve payment capacity of pension: the one is economical paying, the other is to increase the pension revenue which is the main researching object of this paper. The traditional methods to improve the pension solvency such as taxation, public debt and raise of contribution rate of pay-as-you-go system are not be applicable because of both the welfare predicament and the difficulty in execution in reality condition.In the planned economy period, special development strategy and relevant nationalized business level pension system cause part of workers income to be affiliated into state-owned assets. Due to the pension system transition from enterprise level to social management, nationalized business no longer take social security responsibility and the link between state-owned assets and social security disappeared. In this condition, the debt resulted in low wage level of state-owned assets is revealed because the old workers have not individual account which is necessary for adequate benefit after the pension system transition. Theoretically,it is essential to change state-owned assets resulted in low wage level into old workers' individual account monetary value to solve the transition costs. However it would not be the optimum choice to lower the scale of state-owned assets if the whole social welfare level be reduced. There are other ways to use national asset to increase pension revenue. National shareholding old-age security would be established by making use of state-owned assets, by which income of state-owned assets can be used to improve the payment capacity while the social welfare level was not be lowered.Along with the above-mentioned train of thought, this paper includes mainly the following some aspects of research:1. The judgment of China's economy dynamic efficiencyUsing both the comparing method between capital marginal return and GDP growth rate and AMSZ diagnosis method, this paper comes to three conclusions:①The capital profit rate of State-owned Industrial Enterprises and Non-state-owned Industrial Enterprises above Designated Size beyond GDP growth rate continuously from the beginning of 2000. The economy would be dynamic efficient according to the comparing method between capital marginal return and GDP growth rate if the capital profit rate of State-owned Industrial Enterprises and Non-state-owned Industrial Enterprises above Designated Size could be a representative of capital marginal return.②According to AMSZ diagnosis rule, the economy is dynamic efficient because the total capital income beyond the total investment and the net capital income is positive.③The inter-industry and inter-regional research shows that the dynamic efficiency different among industries and regional are obvious. There are a few industries and regional are dynamic inefficient, so the economy running state would be improved if the capital can be redeployed among industries and reginoal.2. The applicability of using taxation, public debt and raise of contribution rate of pay-as-you-go system to improve the solvency of pension system in China's reality conditionCapital golden rate level in overlapping economy is both the capital level to cause the maximum individual consumption and the maximum of the social welfare. It would improve social welfare to make steady capital level to be closed to the capital golden rate level if the autogenous steady capital level beyond golden rate. Accordingly, taxation, public debt and raise of contribution rate of pay-as-you-go system can improve social welfare trough lower autogenous steady capital level when economy is dynamic inefficient. Now China is dynamic efficient, so above-mentioned methods would further make steady capital level to deviate from golden rate and to lower social welfare besides, the raise of contribution rate of pay-as-you-go system would cause negative influence to labor market and both the taxation and public debt would make financial risk more serious. So using taxation, public debt and raise of contribution rate of pay-as-you-go system to improve the payment capacity is not applicable to the China's reality condition. 3. The welfare effect of National shareholding old-age securityThis paper tries to add the national assets as an exogenous variable into overlapping- generational model and arrive at the following conclusion:①c / g=(k* /g1)(f'(k*)n)gf''(k*)k*/g,in dynamic efficient economy,f ' ( k*)>n, c / g>0. So to lower the national assets scale only would lower social welfare level.②If certain percentage of national assets income could be used to individual consumption when the national assets is lowered, the scale of individual consumption would change from c 1 = f(k1*)gf'(k1*)n(k1*g) to c 2 = f(k*2)-b(1-μ)f'(k*2)n(k*2b), in which the "g" is the national assets scale government provide to per effective labor before the national assets scale is lowered, the "b" is the national assets scale government provide to per effective labor after the national assets scale is lowered( b < g), and the "μ" is the percent of which national assets income was used to individual consumption. Under some condition, c 2 > c1 would be realized, so by means of using part of national assets income to increase individual consumption can improve social welfare level. In this paper using part of national assets income to enrich social security fund is defined as national shareholding old-age security which could be the effetive method to improve the solvency of China's pension system in dynamic efficiency reality condition.4. The measurment of liabilities scale of national assets to the transition costs of China's pension systemThe transition costs had dominant changed because of the establishing of individual account. In the enterprise old-age security period, workers accepted low wage level because of the promise of government to give them pension from enterprises which they worked in. After the reform of pension system, the government should guarantee workers that they can get adequate benefits if they execute contribution after the pension system reform as the new workers who begin their career after the new pension system was established. In pooling and individual accounts combination system, old workers have not individual accounts accumulation before the pension system reform, so their individual accounts are not adequate to achieve a desirable substitution rate. The transition costs would be solved if all the old workers' individual accounts were enriched to make them can receive adequate pension benefit as new workers when they retire. The scale that the old workers' individual accounts should be enriched when the individual accounts were set up was defined as the liabilities scale of national assets to the transition costs of China's pension system. The measured results are that the scale would be 2380.9 billions if the desirable substitution rate of individual accounts is 40% and the scale would be 619.1 billions if the desirable substitution rate of individual accounts is 22%.5. The measurement of future deficit scale of China's pension systemThe financing ability of pension system to meet the payment demand is defined as the payment capacity of old-age social security, that is the ratio between the scale of pension can be paid and the pension scale that is necessary to achieve the desirable substitution rate. The shortfall in funds would arise if the payment capacity is not adequate. The desirable substitution rate is designed as 60% in this paper, under which this paper calculates the possible shortfall in funds between the actual payment scale and the scale which is required to achieve desirable substitution rate. The first conclusion is that along with the acceleration of aged tendency of population the burden coefficient of old-age insurance would raise and the peak of aging population would be around 2035. The second conclusion is that the aging population would cause the pension demand incease and the substitution rate actually achieved would be less than 60% after 2007 which would be only around 33% in the severe aging population period. The third conclusion is that the shortfall scale would be 15,590 billions so that China's pension system need funds poured in besides contribution to ensure the smooth operation.6. The actual effect of national shareholding old-age securityUnder the hypotheses on the investment return rate of the social security funds, the profits growing rate of national enterprises, the dividend rate of national enterprises and the national shareholding proportion of the social security funds, this paper predict actual effect of national shareholding old-age security implemented by means of social security funds. The conclusion shows that if the premise is the steadily dividend rate of national enterprises the profits growing rate of national enterprises and the investment return rate of the social security funds are the positive factors of the actual effect of national shareholding old-age security. For example, Under the most optimistic hypotheses that the dividend rate is 50%, the the profits growing rate of national enterprises is 15% and investment return rate of the social security funds is 7%, along with the growing of the profits scale of national enterprises 10% national shareholding proportion of the social security funds can ensure adequate get more dividend income than the pension scale that actual could be paid. So it is equal to establish a new pension system with higher payment capacity than old-age social security by means of national shareholding.7. The implementation methods of national shareholding old-age securityUsing social security funds as media, this paper suggest to establish an operating framework and operation process in which central and local government, state-owned assets management departments, Labor and social security departments, financial sectors and financial regulation departments participate to bring about a special "Pension- Institutional investors- Corporate governance-Capital market-Economic growth- Raising welfare " path which is applicable to China's reality condition. Further, this paper analyzes the problem and difficulty of the implementation of national shareholding old-age security and makes some suggestions include strengthening the linkage between the national shareholding old-age security and the national assets budget, promoting shareholding reform in national enterprises and arranging reasonably the administrative level of social security funds.