Study Of China's Basic Old-age Insurance Fund Investment Operation Mode

With a close relationship to people's livelihood, the country's pension system has always been one of the important jobs of the government. It has also been an important research topic in academia. Related to the basic old-age security issues, the basic pension insurance is the most important part of the pension system, with further effect on social development and stability. With 1970s'economic reform, China's basic pension system reform has also been gradually regenerated from PAYG system to part accumulation system with co-ordinate accounts and individual accounts. However, in the process of reform, the absence of effective response measures to restructure costs has led to issues such as "empty accounts" in personal accounts and so on. These problems were contrary to the original intention of setting up individual accounts, which would also affect the basic pension system both in operation and development. Population aging in China will exacerbate the problem of future payment of basic pension fund. So, to invest accumulation fund with effective operation in order to achieve the goal of maintaining and increasing its value will have very important significance to respond to future payment crisis and inflation pressure.This paper attempts to analyze the current problems in investment operations of basic pension fund and find out the reasons for low efficiency in investment. Based on empirical research, this paper will give appropriate policy recommendations on investment patterns'improvement and investment tools'choice and put forward certain reference value for China's basic pension fund's maintenance and appreciation objectives to achieve.This paper begins with the review of China's pension system reform, combined with the current status of China's pension system, and analyzes the various problems of the basic pension fund investment operations. These problems include:long-term "empty accounts" operation of personal account funds, with no accumulation of funds available for operations; low co-ordination level and inefficient operation management; not much investment channels make it unable to maintain and increase value-added target; lack of effective supervision of investment to guarantee investment security. In order to solve these problems, this paper proposes to build a new basic pension fund investment model assumptions, and uses the most optimal portfolio model to demonstrate the feasibility of basic pension fund to expand the scope of investing. It also proves that the use of reasonable risk control method can effectively avoid investment risks. Finally, the paper proposes several policy recommendations to ensure the achievement of China's basic pension fund's objectives:implement the national co-ordination of basic pension; introduction of investment management practices; improvement of risk management.