A Research On The Investment Management Of Personal Account In China’s Pension Insurance System

The Pension Insurance has accumulated1.9trillion Yuan, because of theInvestment is limited to deposits and government bonds, the Yield is less than2%.Personal account fund is often in devaluation. This paper starts from operatingcharacteristics and management status of personal account, then combining with theexperiences of the National Social Security Fund and Enterprise Annuity Fundsinvestment management, and analyzing the data of OECD countries Pension FundInvestment Management, and drawing successful experiences of the typical foreigncountries pension fund Investment management, it proposes that mode selection, assetallocation and risk control suggestions about the personal accounts of China’s pensioninsurance fund investment management. The main research content and views are asfollows:First, the paper analyses comprehensively current situation about the investmentmanagement of personal account fund. Currently, the investment management ofNational Social Security Funds and Enterprise Annuity Funds have made good gains.But the pension fund of local government managed especially the personal accountshas a high illegally using risk, narrow investment channels and low income. There aremany problems that it is difficult to effectively deal with inflation, and there is lack ofeffective investment management incentive and constraint system, and is difficult togive full play to the social benefits of the Pension Insurance Fund.Secondly, the paper analyses the investment management experiences of thePension Insurance Fund in the United States, Chile and Singapore in detail. the fund’sinvestment management of personal accounts can learn from experiences in thechoice of investment managers, the power of choice to invest way, the portfolio ofinvesting mainly in government bonds and less other investment channels, theminimum guaranteed income rate and investment supervision.Thirdly, the paper discusses in-depth how to choose the investment entities andinvestment patterns of China’s Pension Insurance Personal Accounts Fund. The paperstarts from investment management principles, objectives and conditions of the personal account fund, and focus on the investment management modes that can wechoose in four typs, which are an investment department of setting up an investmentpatterns by social security agencies investment management mode, the socialinsurance bank investment management mode, Market-oriented and competitiveinvestment management mode, and commissioned by the National Social SecurityFund Council investment management mode. It is considered that different provinces,municipalities and autonomous regions should choose different investmentmanagement mode according to their specific situation in the basic of provincial levelco-ordination. Such as full cash of personal accounts provinces can choose the socialinsurance bank investment management mode or commissioned by the NationalSocial Security Fund Council investment management mode, and financial marketsare more developed province can choose Market-oriented and competitive investmentmanagement mode.Fourthly, the paper studies the investment portfolio theory and strategy ofpersonal account fund. It starts from the diversity of investment channels, thendiscusses the effectiveness about investment on stocks, bonds and loans. It analysesthe asset allocation, risk and income of typical OECD members’ pension insurancefund. In this basis, the paper establishes Risk-Benefit model to empirical study aboutthe effectiveness of the personal account portfolio, and proposes the strategy ofChina’s pension insurance personal accounts fund portfolio. It is considered thatChina’s pension insurance personal accounts fund investment should be incrementaloperating strategy, and implement appropriate combination of equity assets and fixedincome assets, taking fully into age-risk factor, different portfolio for different levelsrisk holder. Finally, the paper also develops a kind of multi-level risk monitoringsystem, in order to ensure the security of personal account funds investment. Itproposes specific measures that strengthening the safety supervision of the individualaccount funds from the improvement of the legal system, the construction of theregulatory regime and regulatory improvement. It suggests to establish a investmentmanagement committee and the investment manager responsibility system, and bringin the minimum guaranteed income rate.The principal innovations in the dissertation are: First, the paper argues that toeffectively address the problem of China’s pension insurance personal account fundinvestment, the key is to choose the right investment entities and establish an effectiveportfolio. It analyses pension insurance fund investment management of the OECD countries, China’s enterprise annuity fund and the National Social Security Fund. Itproposes the specific recommendations of mode selection and investment portfolio forthe personal account, and focuses on the relevance of the countermeasures andapplications. Second, it establishes Risk-Benefit model, analyses the conditions tomaximize the risk-benefit, and combines with the characteristics of the pensioninsurance fund, brings in age-risk factor, to ensure asset allocation safe and effective.The model has innovative on theory.