Research On The Impact Of The Central Adjustment Gold Mechanism

The basic endowment insurance system for urban workers in China has undergone institutional reforms.After state pension and unit pension,a modern pension insurance system combined with pool account and individual accounts has established.In this process has produced huge conversion costs and historical debt.Under the actual implementation of the "empty account operation" mechanism of personal accounts,historical debts resulted to increasing implicit debts.In the case that the traditional industrial zones gathered retirees who lack historical contributions,some provinces carry large historical debts.As the global aging trend,China's population structure is also accelerating toward aging.Besides,developed regions attract labor mobility and form diverse labor pattern across the country.Under the combined effect of population aging and labor mobility,the gap of implicit debts between provinces has become more prominent.There are continuous losses in the current balance or the accumulated balances in some provinces,and especially central governments bear high financial subsidies.Meanwhile,several provinces maintain high pension balances for a long time.Guangdong,the most prominent one take over 920 billion yuan for accumulated balances,and over 150 billion yuan for the current in 2017.In view of the huge impact of labor mobility and population migration,the differences in pension income and expenditure between different regions are considered to cause unfairness,as well as the disproportionate financial burden on local governments.In order to alleviate the payment dilemma of the provinces with continuous loss of pensions,the central government implemented the Central Adjustment Fund System in 2018.According to the local wage level,employment and the insured population,the provinces transfer part of their pension income to the central government at a fixed rate.Then the central transfer the pension income back among the regions,according to the concentration of the retired population each.The system forms the transfer payment mechanism of pension insurance income among the regions.This paper mainly studies the adjustment effects and related influences of this new policy.By selecting the cross-sectional data of 31 provincial administrative units in 2017 and the panel data from 2010 to 2017,the paper simulate the policy.We designed two evaluation indicators,named the adjustment effect and the adjustment pressure.The paper analyzed that the adjustment funds mechanism showed the characteristics of directional transfer,and effectively reduce the pension deficit in provinces with loss accounts.The uneven payment pressure also balanced after practice.In the long run,the provinces with net outflow of adjustment funds are facing the adjustment pressure increasing.Meanwhile,the adjustment effect of the provinces with net inflow is diminished,as well as the institutional dependence increases.In this paper,studies on significant figures such as Sichuan,Fujian,and Qinghai found that the central adjustment mechanism has weaker responses to the initial historical debts,population size,and current pension system arrangements in each province.The adjustment effect is affected and fluctuates by the above factors,which creates new inequities between provinces.Through the attribution analysis of the changes in the pension balance in different provinces,we conclude the regulations of the central adjustment mechanism and the differentiated pension needs of each province.In conclusion,we analyze that central adjustment mechanism may encounter adjustment effect declining in the future.In some provinces,there are challenges such as reverse adjustment or insensitivity to policies.The central adjustment mechanism also impacts on the pension insurance system.The status of pension benefits in each provinces remains unchanged.The overall debt scale of the pension doesn't reduce but the payment pressure in some regions is effectively released,and the overall sustainable payment time of the system is extended.New unfairness occurs due to the specific institutional arrangements and differentiated historical debts.The intergovernmental game continues to exist,and the adjustment of contribution rates in various provinces further affects pension income and the local economic environment.This paper proposes policy recommendations for establishing adjustment and feedback mechanisms,gradually increasing the ratio of the upper solution,and lowering the contribution rate.