The Dilemma And Strategy Of The Pension Funding

Social Old-age insurance is an important system which is related to the modern stateof social equity, social stability and national finance including social welfare, economicgrowth, national income distribution and redistribution, as well as political, social and legalfields. Pension insurance has a redistribution function. Initial distribution of income is thesource Pension funds and the base of normal economic operation of Pension funds. Fromthe relationship between the national income distribution and pension funding; wediscussed the problems and proportion of the current structure of the initial distribution ofnational income among the state, enterprises, and residents. On the angle of redistributivefunction of the basic old-age insurance, we discussed the fair share of the pensionfinancing among the government, enterprises, and residents.Since reform and opening, China has a rapid economic development andachievements has gained worldwide attention, but the shortcomings of national incomedistribution structure has gradually emerged.Now, our residents’ income is low, and theinitial distribution and redistribution of national income tilts to the government andenterprises, causing people "not rich", weaking domestic demand, weaking economicrevitalization. Improving the social security system and reforming the income distributionarouse the concern of government departments and academics. Increasing the initialdistribution share of the residents has become the consensus, and in appropriate period theGovernment intends to introduce "income doubling plan" in order to stimulate domesticdemand, to change model of economic growth which is over-reliance on foreign trade andinternational market. It will take some time to reverse the pattern of income distributioncompletely. In this context, facing the current plight of the our pension funding gap, tofurther improve the structure of pension funding, the idea of"reducing the payment burdenon individuals and enterprises, increasing government input,"has entered people’s attention.Compared with most countries of the world, our government finance of social security spending is too low. But, the government proportion of initial distribution is the highest.The residents’proportion of initial distribution of the national income is the lowest, but thepersonal account contribution rate at the upstream level. Our residents’ burden of pensioninsurance does not match the proportion of national income that leads our pension which issupporting by individual and corporate contributions to be unsustainable. AT this stage, thereform of pension insurance in China emphasis individual contribution responsibility, andredistribution of the social security system is a weakening trend. We suggest that theserious imbalance between pattern of distribution and redistribution of national income andthe structure of pension funding is crux of the Chinese pension. At the same time, we alsocan not ignore that the existing pension contributions is heavy burden on low-incomefamilies and leading crowded-out consumption effect. The reform of pension paymentsystem will have a positive significance to economic growth.In short, to resolve the pension funding problem, we believe that establish thecoordination mechanism between pension funding and the initial distribution of nationalincome. On the basis of the initial distribution of national income, we determined areasonable the payment responsibility of residents, government and enterprises. Improvethe proportion of resident’s initial distribution, and improve the general workerscompensation, reinforce the economic base of the individual contributions, easing in theindividual contributions of the heavy pressure of low-income people, and adjustgovernment expenditure on pension insurance.At the same time, reduce the burden ofpayment appropriately, increase payment initiative.The innovation of the paper is putting pension funding on the large platform ofnational income distribution, which breakthrough pension funding structure paradigm fromthe angle of internal financial balance of old-age insurance system. Apply the wholedifferential equation of income growth; derive quantitative relationship between nationalincome growth and income growth of residents, government and enterprises. To establishthe coordination mechanism between pension funding and the initial distribution ofnational income, will realize the health operation of social security system and economicgrowth.