Measure Of Fiscal Affordability For The Pension Fund Gap And Stress-testing Research In China

Social security is indispensable to the welfare mechanism in modern society, it is the "safety net" and "stabilizer" of social development. The basic pension system is the core of the social security system, which stabilizes the social order and promotes the harmonious development of society. At the present stage, our country’s basic pension insurance system is partially funding system which combines social pooling and individual accounts. But in the process of system transformation from pay-as-you-go to partially funding system, there are many problems, such as the transitional cost is large, the system is not perfect and "empty account" size is increasing. Moreover, with the accelerated process of China’s aging population, pension expenses increase。 These factors make the pension fund income and expenditure contradiction, there is a gap in the basic pension insurance fund and the gap is growing. The pension fund relates to the vital interests of the people, therefore, the pension fund gap draw attention to the financial sustainability of the pension fund.When the pension fund payment is insufficient, the fiscal subsidies bear the responsibility for the pension fund so as to ensure the payments smoothly. The intensity of fiscal subsidies should be within the scope that the government can afford, otherwise, it may affect the long-term and stable development of the economy and even the debt crisis is triggered by excessive fiscal risks. Therefore, it is necessary to analyze the fiscal tolerance of the basic pension fund gap, conduct the stress test, and measure whether the finance can stand the basic pension fund gap in the near-term future. This helps to improve our country’s pension insurance system, and provide the reference for fiscal arrangements in respect of pension subsidies.Drawing on the ideas and methods of macro stress-testing of commercial banks in financial field, The paper takes the fiscal affordability for the pension fund gap as the explained variable, takes factor variables that influence the fund gap tolerance as the explanatory variables, and establishes the fiscal affordability model for the basic pension fund gap and carries on estimation and examination of the model. Then it uses scenario analysis method to measure the fiscal affordability for the basic pension fund gap when we change the value of key variables, and come to the conclusion that the finance has the tolerance for the basic pension fund gap. Finally, the paper puts forward the corresponding suggestions on perfecting the fiscal aid safeguard mechanism,raising overall plan level of the pension,strengthening the management of funds and delaying the retirement age.