Research On Implicit Pension Debt Of China

From the early 1950's, China has basically established a PAYG system of basic old-age social insurance system, but with the reform and opening up, economic development, social aging process, growing pension burden is now paied increasingly difficult to maintain, therefore, China began to carry out social basic pension insurance system reform, the PAYG system to the partially funded system changes. However, in the process of change has also had the pension implicit debt. Over time, the implicit debt of the problem is gradually emerging and seriously affected the normal operation of the pension funds. Whether can handle the problem as the implicit pension debt Transformation is one of the keys to success. Therefore it is necessary to strengthen the research for the implicit pension debt.This article from the definition of implicit pension debt and the calculation of implicit debt with actuarial method studied and analyzed the problem of implicit debt. This paper argues that the definition of implicit debt should be the amount of funds to support the payment commitments of PAYG pension system. Therefore, the implicit pension debt resulting from the payment obligations of the people who began to work before the implementation of partially funded system.About the implicit pension debt calculating method, Endowment insurance actuarial method is adopted to calculate the present value of the future implicit pension debt. The first method is that different ages, genders and retiring ages should be assorted. The pension implicit debt will be clear by totaling of every sorts of the implicit pension debt. Another method is that calculating the real condition of each person who attend endowment insurance, then the implicit pension debt of each person will be totaled. This method is more complicated. Without computer it will never come true. But with applications of computer in domestic endowment insurance, this method will be realized. Its advantage is that the date of the pension implicit debt will be calculated accurately after picking up the dates by computer program. Indeed, the time of domination will be calculated.Furthermore, this text specially insists that it's very important to select the primary parameters of the calculation about the pension implicit debt. Selecting and estimating the parameters will influence the correctness of the calculation. This text expounds the importance of mortality table, wage increase rate, old age pension growth rate level, discount interest for the calculation. Also I particularized some methods of the calculation. For example, exchanging of the future mortality which is estimated by model Lee-cater should be used in the calculation for the implicit pension debt. Because increasing of the average life will induce increasing of the debt consequentially. Besides model AR is adopted to estimating the wage increase rate. Old age pension growth rate level is directly related to the wage increase rate.In order to show the scale of the implicit pension debt directly, this text takes a city of Liaoning province for example to estimate the scale of the implicit pension debt and give the scale of implicit pension debt under the different interest rate and the different old age pension growth rate level.At last, based on the analysis of the implicit pension debt and other current research results, I analyzed making up the loss of the fund by the implicit pension debt though three ways:increasing the fund income, reducing fund expenditure and injecting asset to the fund. I also studied gains or losses and possibility of various methods.