The Research Of Pension Insurance In The Background Of Aging Of Population In China

The aging of population is one of the results of structural changes of population. One of the fundamental reasons is the social economic and scientific and technology development, as well as a long period of relative peace worldwide which improve the human existence state. In China, the family planning policy accelerates the process of aging population artificially, which has a profound impact on the social economic development and is one important problem related with national interest and people's livelihood. The aging of population come so fast, so that the pension system undertakes enormous payment pressure. At the same time, improving people's livelihood, the demand for sharing the results of the reform also calls for the comprehensive reform of pension system in order to adapt to the new challenges in the future. This paper take the relationship between aging of population and the pension system as the breakthrough point, research new sustainable pension system mode in order to adapt to China's national conditions and to respond to future pressures.First, this paper generalizes the research literature and summarized the related theories. It is noticed that the aging population research concentrate on the research of the influencing factors of aging population. Birth rate decline was the main cause of aging population. Population economists make in-depth discussions on the birth rate problem and series of theory were formed in this process. Leibenstein regarded children as the consumer durables in the home production process, the cost utility analysis was conducted on this basis. Becker analyzed the family demand of children from the quantity and quality needs. Easterlin discussed birth rate problem from the perspective of supply and demand. The analysis of birth control in reducing the demand for children constitutes the backbone of modern birth rate research. Other population economists discuss the influence of birth rate to aging population from the aspects of inter-generational transfer of wealth, gender roles and family etc, which rich the economic theory of birth rate. These theories are summarized, extended and analyzed in this paper, and then point out that using Leibenstein's child utility theory the main reason of birth rate decline since Industrial Revolution could be conducted. That is the industrialization and urbanization caused by Industrial Revolution lead to the fundamental change of production and lifestyle. The cost of child raising increased substantially, and its utility expectation decreased relatively, which lead to the fertility desire decline of childbearing age couples and the constant decline of birth rate. Due to social economic condition improvement, the threshold of higher birth rate change to low rate is decided by residents'living standard. In addition, the impact of aging of population on economic growth, employment, income distribution, consumption, savings and investment is analyzed.The study on pension insurance theory was earlier than population economics, and the research results were abundant. It is noticed that the research on pension insurance by western researchers developed from the emergence of economics theory, while it rooted in the accumulation of ethical culture of western society. This paper using Paul Samuelson's theory, which is explore economics core of pay-as-you-go system based on two overlapping generalization model in 1958, as the division to divide two periods to generalize and explore related research results.Second, this paper discussed the characteristic of aging of population of China. Based on the previous studies, this paper illustrated that China is facing with the contradiction between controlling population growth and slow down the aging of population, and small policy choice space compared with western countries. The development of aging of population is fluctuated because of the three times of birth peak. The economic and social developments extend the average lifespan in China and it promotes the aging of population, this influence will increase in the future. The challenge of aging of population to pension system is reflected in the increasing pension payment pressure which threatens the existence of the system. Existing pension system could not play the role of pressure reducer for the social stability and harmonious society building. Meanwhile, it could not provide a institutional support for the industrial structure transformation and upgrade, as well as domestic consuming market exploit.Third, this article describes pension system's basic regulations and main features of China in each period since 1949. It is illustrated that the early pension system construction obtained obvious achievement, except the decade of"Culture Revolution". It set up the legal framework of pension system and began to develop in the direction of social co-ordination. The coverage range was broader and it ensured the higher level of pension payment compared with the lower wages at that time. In general, it suited for the planned economic system in that special period. While some problem still could be found, such as the ownership, narrow scope, decentralized management, multiple policies coming from different department, fragmentation, vast differential treatment to workers in different ownership enterprises etc. However, if these issues could be looked at under historical background, they are not prominent problem at that time. After reform and opening up, the first stage of pension insurance reform completed the change from enterprise insurance to social insurance, which set up good foundation for future reform. Although the pension insurance reform after 1991 has achieved periodical results, the key issue has not been resolved fundamentally.First of all, there is great controversy in the choice of fund raising mode, which is between pay-as-you-go system and accumulation system. No matter which fund raising mode is chosen and matched, the following problem must be resolved. First, the payment crisis caused by aging of population must be responded effectively or alleviated. Second, pension insurance's coordination function and fairness should be reflected generally. Third, it should be helpful or at least not obstruct the macroeconomic development. Fourth, the responsibility should be distributed fairly among country, enterprises and individuals. From this point of view, the difference of the two modes is far from people's imagination. In order to learn from each other and ease the contradiction, fund raising mode is in the right direction. But the system conversion should be mild without too much form pursuit. In order to ease the cost pressure, nominal account is a feasible transition.Next, in the problem of unified management or decentralized management, the national coverage and co-ordination, and the implementation of generalized preference of pension insurance in rural area are needed. One of the problems is the isolation between urban and rural area, big interest difference among all levels of society. The other problem is lower standard of co-ordination, decentralized management, which lead to the poor fairness and mobility, weak risk resistance ability, as well as unbalanced enterprises burden etc.Third, basic pension insurance fees should be changed to tax. Although pension insurance tax has its specific application area and limited scope, in fact, it corresponds for the combination of fund raising mode. In the form of pension income, tax should be the main form, fees are the supplement, and both of them work coordinately.Finally, the cost of transformation should not be afforded by"old"and"adult", because their pensions have been retained by country in form of tax, so these loans should be paid by country. The empty account has been used by state, therefore it should be afforded by the state, while the enterprises and individuals should undertake part of subsidiary responsibility.Fourth, the construction of pension system of other countries is worthwhile for consideration. (1) In the basic mode aspect, design of pension system must take into account of the national conditions. At present, China should take all the beneficiary into the pension system and complete the national pension insurance coverage. Under the unified legal framework, the difference among all levels of society could exist. (2) In the source aspect, the source of pension come from country, enterprises and individuals, the removal of each side will add the burden of the other two sides. It will affect the sustainability of pension system; therefore, the burden of each part should not be changed easily. (3) Pension insurance payment should be incentive and humanistic. Withdraw time should be flexible; the amount of pension should increase, decrease and adjust correspondingly. (4) Payment standard indicated by replacement rate related with positioning and system formation of pension insurance. No matter high or low, it should not isolate with national condition. (5) The operation and supervision of investment have development potential. While the coexistence of benefits and risk has not been broken by pension funds. The privatization reform of pension operation increase the benefits, meanwhile it increases the risks. In addition, there is no success test from the repeated economic cycle.Fifth, in order to resolve these problems, this paper assumes that the pension system reform should clarify following principles in the first place. (1) Insist on fairness first and take into account the efficiency policy, balance the interest of each part. (2) Deal with the relationship between rights and obligations, and reflect the balance between pension insurance coordination functions. (3) Maintain appropriate pension insurance standard. (4) Adhere government led and market added. (5) Implement incentives and restrictions method together.On the base of these, social security legislation should be implemented and pension system should be improved. (1) Improve the multi-pillar pension system, consolidate the fund raising mode. (2) Expand the scope of pension insurance, achieve the goal of national coverage, and national coordination. (3) Further improvement of pension payment system, Financial responsible for the farmers'pension payment. (4) Introduce social security tax and decrease tax rate appropriately. (5) Use variety of methods to eliminate the cost of conversion. (6) Accomplish the cooperation in the management system, separate the money and management power, clarify duty, and manage effectively. This framework should compose of social security administrative departments, the Ministry of Finance, the National Social Security Fund Council, and other local tax authorities.