The Feasibility And Constraint Conditions Of China’s Basic Endowment Insurance Fund Investing In The Stock Market

There are two big problems about pension fund in our country at present: One problem is that pension fund investment channel is narrow. Yield is too low, the case that revenue not cover expend is severe. Another problem is that the main management body on the operation management of pension funds is unclear and inefficient. In recent10years, due to the inflation factor, the actual amount of our pension funds is shrinking, there is a huge gap between the actual size and potential demand of pension funds, which is bad for the long-term stable development of the endowment insurance system in China. If we take the intensified trend of population aging and inadequate financial transfer payment into consideration, the pressure of future pension fund expending is huge, even large pension funds gap may occur. These are not only not accord with the inherent requirement of security of pension fund, also is in violation of the principle of profitability of basic pension fund, but also not conducive to the long-term development of the capital market, especially the stock market. Therefore, pension funds need a market-oriented operation, reform the existing investment strategy, is very important for pension funds to seek a market that can provide long-term and stable income for pension funds. The stock market may not be the only way, but it is actual a suitable choice and is one of the most important way. With perfect stock market, investors not only can obtain more substantial long-term returns under the condition of investors bearing a certain risk, but also there is a huge investment risk. This paper is mainly aimed at discussing investing pension funds into the stock market which is not only higher-yielding but also high risk. Of course, investing in stock market referred to in this article is not all the pension funds investing in stock market, but only a certain proportion of pension funds. It can ensure the safety of pension funds as well as get relatively substantial long-term returns, so as to improve the yield of pension funds, and achieve the goal of preserve or increase the value, and mitigate the effects of inflation, deal with the impact of ageing population.This paper take the analysis of endowment insurance funds and their financing patterns as a start, combine the reality of the reform of the endowment insurance system of China, and discusses the main problems of the basic old-age insurance fund investment management. On this basis, the necessity, feasibility and constraint conditions of the endowment insurance fund investing in our country stock market is mainly studied, and puts forward some relevant countermeasures and suggestions. In order to create a good institutional environment for China’s basic old-age insurance fund investing in stock market, and to realize the sustainable and healthy development of China’s pension fund.This paper is divided into six chapter altogether. Its basic research ideas and views are as follows:The first chapter is the introduction. Firstly, it outlined the research background and significance of this thesis, which leads to the problem are to be discussed in this paper; Second, sort out the relevant literature review, state and compare the related theory research status and development trend at home and abroad.The second chapter makes a brief introduction of the basic endowment insurance fund and their system theoretically. First, from the perspective of international, do some introduction of fund of primary endowment insurance system, basic properties and characteristics of endowment insurance fund, the three international popular financing modes of the fund of primary endowment insurance, as well as the three pillars of endowment insurance system, at the same time it also introduce the nature and composition of basic endowment insurance fund in our country, and review the reform course of the old-age insurance system in our country. Based on these theories, the conclusion is that the current endowment insurance system has not adapt to the economic development of China and the present situation of the aging population, another important period of reform is coming.The third chapter is the necessity research of the basic old-age insurance fund investing in our country stock market. First, start from the present situation of our country basic endowment insurance fund operation mechanism, put forward China’s current pension fund financing mode and investment mode caused huge gap of China’s basic old-age insurance fund, pension fund investment channel is narrow at the same time, which is not conducive to the value of pension funds. Second, analyze the increasing population aging trend in our country, which makes the pension fund income gap continues to expand, concluded to continue to practice the accumulation fund system and increase the funds investment; Third, take "fisher effect" as the theoretical basis, this paper expounds the stock assets can cope with inflation in the long term, what’s more, Chinese stock market is gradually perfect, there is interaction between pension funds and the stock market, etc., so that China’s basic old-age insurance fund invest in stock market can achieve their value, and response to the inflationary pressures. Fund of primary endowment insurance in our country, therefore, must change recent operation mechanism, to enter the stock market. These demonstrate the necessity of the basic old-age insurance fund investing in our country stock market.The fourth chapter is the feasibility of our basic old-age insurance fund investing in the stock market. This chapter firstly introduces several current relatively popular management mode, investment mode and regulation mode of pension funds in the international, to provide some enlightenment and reference for China’s pension fund operation model. Afterwards, the national social security fund are taken as the breakthrough point, through the analysis investment returns of the national social security fund since the establishment and compared with the rate of inflation, concluded that the national social security fund investing in the capital market is successful and positive, which gives our country basic endowment insurance fund investing in the stock market some positive revelation and reference. Once more, the stock market in China have made a great effort to curb speculation, to improve management level and enhance market transparency of listed companies, strengthen the protection of the interests of small investors, to crackdown on insider trading and other aspects, this all has made great achievements, all of these create a good institutional environment and conditions for basic endowment insurance fund entering into the market. As long as certain risk control, it can be invested in the stock market actively. Finally, on the basis of above analysis of the feasibility of China’s basic old-age insurance fund entering in the stock market, the management mode, investment mode and regulation mode of basic old-age insurance fund investing in our country stock market is putting forward.The fifth chapter is the constraints research of the basic endowment insurance fund investing in the stock market. From the current system pension funds, the stock market structure and the operation efficiency, etc., professional investment management personnel, the existing relevant laws and regulations and other legal and institutional aspects to analyze the constraint conditions of the basic endowment insurance fund investing in the stock market, and concluded that basic old-age insurance fund exists serious empty account problem, our current system of laws and regulations is not mature and the stock market is not perfect, the lack of specialized investment institutions and talent, and unclear investment operation system are constituted constraints of basic endowment insurance fund investing in the stock market.The sixth chapter is the countermeasure research of the institutional environment of basic endowment insurance fund investing in the stock market. Mainly aimed at the constraints put forward in the fifth chapter, from perfecting capital market, formulating related policies, laws and regulations and system, establishing and improving the supervision and management system, and cultivating professional institutions and professional talents, etc., put forward several policy suggestions:To separate personal accounts from the social pooling accounts as soon as possible, and to fully the fund of personal old-age pension accounts; To improve laws and regulations system of the basic old-age insurance fund investment operations; To further standardize the stock market system construction, and to improve the quality of listed companies; To establish and improve the investment supervision system, to strengthen the supervision of primary endowment insurance fund; To strengthen the construction of endowment fund governance structure and internal control system, to cultivate fund management talent and so on.The unique features and innovations of this paper are as follows:First, the topic is novel. Most of the literature is the study of relationship between the pension funds and capital market, and less research the feasibility and constraint conditions of the basic endowment insurance fund investing in the stock market. This paper use system analysis method, from the legal system environment, institutional environment of pension funds and the stock market, and regulatory platform to analyze the constraints and perfect countermeasures of the basic old-age insurance fund investing in the stock market. Second, the analyze perspective is novel. Many scholars are based on an empirical analysis of the relationship between foreign pension funds and capital market, in order to prove the feasibility of pension fund investing in capital market, and then applied this conclusion to our country. This paper make some assumptions of the operation pattern of our basic endowment insurance fund investing in the stock market through using for the reference of foreign experience and based on its national conditions, taking the national social security fund investment operation as the breakthrough point. This analysis angle of view is rare in domestic research.