Research On Optimal Urban Basic Pension Insurance Postponing Retirement Rate And Replacement Rate For Social Pool Pension

With the intensification of China’s aging population and rising average wage, the payment pressure for basic pension insurance continues to increase, and the basic pension insurance’s replacement rate declines. In order to ensure the quality of old people’s life while not ignoring China’s economic stability and sustainable development, some parameters in the basic pension insurance system must be adjusted. This paper introduces a postponing retirement policy, establishes a balanced system of basic pension insurance to analyze the relationship between social welfare and basic pension insurance, then gives suggestion on postponing retirement police and insurance reform from the empirical result.The paper first introduces the basic urban basic pension insurance development history, the country’s current retirement system problem and illustrate our statutory retirement age is too low. Then we set up an overlapping generation model that has introduce postponing retirement policy, integrate the individual, business and government behavior to determine the optimal retirement age and insurance replacement rate that maximize the social welfare. in order to investigate the impact of longevity risk on basic pension insurance, human’s life is uncertain. After that we investigate how survival rate and population growth rate can affect the optimal postponing retirement rate and insurance replacement rate through numerical simulation. Simulation result show that the decline in population growth rate would lead to early retirement (weak) and lower replacement rate, the increase of survival probability would lead to postponing retirement and higher replacement rate. When the population growth rate and the probability of survival both change, people would choose to postpone their retirement, but the replacement rate cannot be determined.Finally, according to the simulation result, the paper recommend that China should choose the right time to postpone the retirement age, the setting about retirement age should consider specific changes in life expectancy. In addition, China may also consider increase in the population growth rate to ease population aging problem.