Research On The Risk Management Of Pension Fund In China

Since the financial crisis, the investment loss of the pension fund in China isheavy. With the population aging and the huge hidden debt of the pension fund inChina have become increasingly prominent, facing the impact of inflation and otherfactors, pensions is facing the payment crisis. In addition, China’s capital market andthe laws and regulations related to the pension fund investment is not perfect thatbring the risks to the pension fund investment. How to effectively prevent and avoidthe risk of the pension fund investment, and to ensure that increasing the income ofthe pension insurance fund, and to achieve the best return on investment under theacceptable level of risk, we must study and solve the issue.This paper uses the comparative analysis method, a combination of qualitativeand quantitative analysis method, and the empirical and normative analysis method toanalyze the unity. The paper uses the pension fund in China as the research object,based on the description of the pension fund investment model, investment in thestatus and problems, analysis of the pension fund investment risk and its causes,combined with the mode of foreign investments of pension fund operators andrisk-control measures, and finally put forward the policy recommendations of thepension fund investment risk management system.The main contents of this paper include the following sections:1. The present situation and the risk of the insurance fund investment in China.Firstly, the part expound the present situation and the problem of the pension fundinvestment in China, through the analysis of the operating mode of each of the basicpension fund, the National Social Security Fund, as well as the enterprise annuity, thepaper obtain the following conclusions: due to the investment single way and theeffects of inflation, the basic pension fund has a lower investment income, and eventhe actual investment income is negative, meanwhile, the basic pension insurancefund management institutions is loose, the loss of professional and not be able toeffectively monitor the implementation of the pension fund; National Social Securitythe Fund is subject to fluctuations in capital market index, there is the risk of theportfolio. By using VaR to measure the investment risk of the National Social SecurityFund, the paper find the value of the risk; the enterprise annuity investment is mainlyaffected by the impact of the financial market uncertainties, the income fluctuationsgreat. Followed our pension fund investment risk analysis focuses on the causes ofour pension fund investment risk-information asymmetry between the principal andagent and target inconsistent, as well as each of the main subject of the risk in pension fund investment process that is the pension fund sponsors, investment managers, fundtrustees.2. Foreign investments of pension fund risk management and its revelation. Thispart analyses the main pension fund investment in the United States and Chileoperations management mode and its investment risk control measures. For theUnited States, the three pillars of the pension insurance fund-organized by the UnitedStates federal government old age and survivors’ Social Insurance Trust Fund underthe Social Security Fund, the U.S. state and local government pension fund, privatepension fund investment, including the investment tools, investment field, obtainingthe U.S. pension fund investment risk control measures, including specializedinvestment operations, diversified investment strategy as well as regulatory and legalsystem. For the pension insurance fund investment in Chile, through the data, thepaper introduces the composition of the portfolio as well as the Government of Chileon the proportion of the fund investment restrictions. Chilean pension fund investmentrisk control measures include the insured to choose privatization of the pension fundmanagement company, to establish a system of investment reserves and surplusreserves and indirect government regulators. Finally, the paper introduces therevelation of the pension fund investment risk management in China.3. Improve the pension fund investment policy recommendations of the riskmanagement system in China. The last part is based on the analysis of the pensionfund investment risk, through the analysis of international investment managementmode——completely centralized management mode, decentralized managementmode and moderately concentrated management model, facing the China’s nationalconditions, the paper obtains that pension fund investment management mode withthe public nature of the pension insurance fund to take a completely centralizedmanagement mode, with the private nature of the pension insurance fund to take themoderately centralized management mode. Finally, to improve the risk managementof the pension fund investment policy recommendations, including the developmentof a diversified investment channels, rich pension fund investment products, andincrease overseas investment, increase our pension fund indexation investment,strengthen our pension fund investment professional management, and improve ourregulatory system of insurance fund.