Studies On The Capital-Raising Mode Of Our Urban Endowment Insurance

Increasing aging population around the world are facing tough crisis in endowment insurance. The traditional PAYG model is difficult to continue under the impact of the silver tide. In order to protect the living standards of the old and relieve financial pressure, a wave of pension reform has been globally launched since 1970s. Capital - raising mode is directly related to a nation's rate of saving, labor supply, economic growth and a series of important issues. Therefore, the reform of Capital - raising mode has become the focus of endowment insurance reform.There are mainly three capital-raising modes of the endowment insurance in the world, namely, pay-as-you-go mode, full-funded mode and mixed mode. Different modes of capital-raising have their own social and economic effects. Since 1980s, funded scheme which emphasizes individual responsibility has gradually become popular in different countries due to the insurmountable problems of PAYG. But funded scheme also faces its inherent deficiencies. Therefore, in 1990s, seven Eurasian countries introduced national defined contribution scheme---- mixed-mode system of PAYG scheme and funded scheme. This scheme follows the principle of the funded scheme. It connects payment and future payments so as to remodel and enhance the incentives of labors by strong transparency. So it is a good choice for countries in transition.China has established SP&IRA, a mixed system in 1990s. The establishment of individual accounts marks the endowment insurance's tremendous progress in capital-raising mode transition from PAYG mode to funded scheme. However, this policy has not gotten a harvest yet. Instead, there come a lot of problem with the system, especially the "empty account" in individual account is serious. In order to solve the existing difficulties and choose a suitable mode of capital-raising in endowment insurance, more and more research have been initiated and continued though little agreement have reached.This article focuses on the capital-raising mode of urban endowment insurance. This paper starts with the economic effects of the three modes. It systematically discusses the advantages, disadvantages and suitable conditions of three modes in both theoretical and practical ways. By analyzing the crisis in our current SP&IRA mode under the tendency of aging, learning from other countries'reform, and combining with our economic performance and domestic environment, this paper analysis three modes'applicability in our country and points out that national defined contribution scheme is the best choice nowadays.This article argues that the national defined contribution scheme should be introduced in our country. PAYG system can not adapt to our future population aging trends, and our current system does not have conditions for funded scheme, while the national defined contribution scheme can not only avoid the huge transition costs and help solve dependency burden of old age, but also can adapt to our capital market. It is the most feasible response to the challenge of silver tide. Therefore, the future reform should be established to co-ordinate pooling account under the national defined contribution scheme and individual accounts under funded scheme. Funds for individual accounts can promote capital market development, thereby generating economic growth. Although national defined contribution scheme is a better choice for us, it also has its limitations. In the long term, it can not relieve the crisis in endowment insurance under the impact of aging. So as the Chinas capital market develops, the nominal individual accounts and individual accounts can adjust the ratio between them, gradually increase the accumulation of factors, and correspondingly lower the proportion of individual accounts so as to lay the foundation for fully funded system of our capital-raising mode of endowment insurance.