The Impact Of Pension Insurance For Urban Residents’ Savings

In recent years, along with the rapid development of China’s economy and society, people’s living standard has improved steadily and the social security system has also improved gradually. However, it’s an indisputable fact that we are faced with slow growth in consumer demand and high household savings rate in the long run. Factors affecting household savings are manifold. As a means of balancing the life cycle of welfare, pension system’s perfect or not largely affects the residents’ decisions about consumption and savings, and thus affects the domestic consumers’ demand conditions. Therefore, it has great significance for the protection and improvement of people’s livelihood, expand consumer demand and maintain stable and healthy economic development by studying the relationship between household savings and pension insurance system and exploring pension insurance’s impact on residents’ savings.By combing and summarizing domestic and foreign scholars’ literatures, this paper first analyzes the main theories on how pension insurance affects residents’ savings and highlights some classical theories like absolute and relative income theory, life cycle and permanent income hypothesis, precautionary savings and prudence savings theory, asset substitution and derived retirement effect and so on. Then, combining with China’s actual situation, the paper carries out a detailed analysis of the main factors affecting household savings and the mechanism that pension insurance affects resident savings, in order to lay a solid foundation to the situation analysis and empirical analysis below.In the description of the status quo of pension insurance, urban residents savings and the relationship between them, the paper specifically introduced the changes and development of pension insurance, and the measurement with trend of China’s urban residents savings. And then analyzes the absolute differences between pension insurance and resident savings in the eastern, middle and western area from a regional perspective. On the basis of that, the paper analyzes pension insurance’s influence on resident savings of different regions and different income levels by income distribution and pension expenses. Based on qualitative analysis and combined with the actual situation, the paper does empirical research on the relationship between resident savings and pension insurance. Firstly, it selects the relevant variables affecting resident savings and establishes the panel data model, using the 31 provinces data from 2000 to 2013 of eastern, middle and western regions, putting per capita urban resident saving rate as the explanatory variable and the pension replacement rate, lagged per capita urban resident savings rate, index of per capita gross domestic product, the consumer price index for urban residents, per capita disposable income growth, interest rates and uncertainty indicators as the explanatory variables. Secondly, it does unit root test and co-integration test on the variables, and the test results indicate that there exists long-term equilibrium relationship between the variables. Next, it empirically analyzes the regional differences between pension insurance and resident savings, in order to provide empirical data to the pension insurance policies which can stimulate consumption. Second finally, by analyzing the empirical results found in eastern, central and western regions the pension system significantly affect urban household savings behavior, but the impact and influence direction are differences; the current period of high savings often have a significant long-term effects, namely savings inertia obvious; income levels and uncertainty also have a significant impact on household savings decisions. Finally, according to the research findings, the paper proposes the policy recommendations of improving the pension system and stimulating residents’ consumptions, that is, effectively combining the pension insurance and moderate consumption attitudes, increasing resident income, reducing the income gap, deepening financial market reform and expanding financing channels for residents.