The Microeconomic Analysis Of Corporation Pension System

Generally speaking, the Corporation Pension can be defined as a kind of special savings. Investing for retirement is one of the most important tasks of a person, and Corporation Pension is one of the effective ways that the consumers can use to invest for their retirement and eliminate the bad effect of the incoming fluctuation to make their benefit maximum. The employees can arrange their incomes and consumptions rationally through the Corporation Pension.Corporation Pension System is the important part and the second pillar of the social security system. Generally, the government does not operate the Corporation Pension directly, and does not provide financial surety to it. The government only pays its attention to make the system and policy. At the same time the government always takes the responsibility of the marketing supervision.The Corporation Pension System (usually be called by some foreign countries as Occupational pension, Private account pension, Employer annuity or Employer's pension, Individual pension or private pension) is established under the tax benefaction, the government inspiration and supervision in order to provide some income security to the employees for their future retirement life, which is well developed in the western countries but the new thing to Chinese.In this article we will try to use the economic analysis to search what the essence the Corporation Pension would be, why the people and society need Corporation Pension System, how the Corporation Pension System can work effectively, what the benefit we will get from the Corporation Pension System and what the cost we will pay for it.The first part of the article will briefly introduce the history of the Corporation System in our country and the overseas.The second part of the article will use the basic economic theory to discuss that, if the consumer was totally rational and the market system was effective, the Corporation Pension market would reach equilibrium. In this way, the consumer and the society will reach their benefit maximum. Unfortunately, this situation could never be reached in real economy as the result of the people's reasonless behavior and the imperfect market system.In the third part we will discuss the effects of the consumers'behavior. We will argue that a plausibly important source of a poor performance of preparation for retirement is procrastination. We present a simple model and calibration exercises showing how a person who naively procrastinates due to a time-inconsistent taste for immediate gratification may put off investigating, or implementing, superior investment strategies. Even when the person knows that the benefits of finding a superior investment enormously outweigh the short-term effort costs, she may significantly procrastinate because she repeatedly plans to put in the effort soon. We conclude by discussing some policies that might be used to influence the savings behavior of procrastinators, with an emphasis on policies aimed at default options and short-term incentives that do not significantly alter long-term incentives. At the same time we will discuss the effects of the changes of the consumers'risk attitudes. It's well known to the public that the elders would hold the more conservative risk attitudes than the young. We will prove that, in this situation, the young won't invest enough money for their old life.In the third part we prove that the Corporation Pension market won't reach the equilibrium spontaneously despite the equilibrium does exist. That is why we need the government to make the system and policies to restrict the behavior of the consumers and the corporations.In the last part of the article, we will make a conclusion of the whole article.