China's Pension System Option And Economic Growth

The current pension system in China not only constrains the development of enterprises and but also causes many other problems such as excessive payment pressure on pension funds in regions like Heilongjiang Province.To tackle these problems,three pension systems are defined,including SP(the combination of social pooling account and individual account)system,SSP(the separation of social pooling account and individual account)system and NSP(nominal combination of social pooling account and individual account)system.We build an inter-temporal generation overlapping model of endogenous human capital and study how different pension systems influence the consumption of consumers and enterprises,budget constraints and economic incentives and thereby have impact on optimal individual's savings and education investment,which are important factors of economic growth.We use the numerical simulation method to measure the contribution to economic growth of these three pension systems.We also explore how the changes of the contribution rate of social pooling account and the individual account influence economic indicators.We draw the following conclusions:Firstly,the savings rates increase with the decrease of the contribution rate of social pooling and individual account under three pension systems.The education investment rate increases with the decrease of the contribution rate of individual accounts under NSP system.However,the education investment rates are not affected by the change of contribution rate of individual accounts under SP system and SSP system.Secondly,under three pension systems,.the economic growth rate increases with the decrease of the contribution rate of social pooling account.The economic growth rate is not influenced by the contribution rate of individual account under SP system and SSP system.The economic growth rate decreases when the contribution rate of individual account increases under NSP system.Thirdly,the economic growth rate under SP is the highest among three pension systems.SSP ranks second but it spares more space for the development of enterprise annuity system so SSP is favorable to the forming of a second pillar of pension system.The economic growth rate under NSP is lower than those under SP and SSP.Therefore,SP system and SSP system are better options and may be adopted in the future.