Calculation And Policy Simulation Of Basic Pension Insurance Security Level For Flexible Employees

In the context of the increasing number of flexibly employed persons in China,the State Council held an executive meeting of the State Council on 12 May 2021,which identified measures to further support flexible employment,one of measures is to study the formulation of measures for flexibly employed persons to participate in the basic pension insurance for urban and rural residents,and to promote the liberalisation of household registration restrictions for flexibly employed persons to participate in social security in their place of employment.In the same year,provinces issued policy documents gradually to further promote the participation of flexibly employed persons in the basic pension insurance for enterprise employees.However,since the policy has been implemented,flexibly employed people still face difficulties in making contributions and the low level of pension insurance coverage.The low level of basic pension insurance coverage will directly affect the quality of life of the flexibly employed in old age,making it difficult to secure the basic needs of life in old age.Analyse the causes of the low level of basic pension insurance coverage for the flexibly employed,and how to improve and raise the level of coverage,are important for the effective protection of the pension insurance rights of the flexibly employed.First,this paper measures the real replacement rate of basic pension insurance for employees and urban and rural residents respectively,by constructing a model of the real level of basic pension insurance and a model of the moderate level,based on the 2018 data from the CFPS database of the China Household Tracking Survey.The lower and upper limits of the moderate level of pensions for flexibly employed persons were measured based on the data from 2012 to 2018,the comparison revealed that the actual replacement rate of urban and rural residents’ pension insurance is lower than the actual replacement rate of employees’ basic pension insurance and is below the level of the moderate lower limit of pensions,the pension replacement rate of the basic employee pension insurance is lower than the initial target replacement rate of the basic employee pension insurance system and well below the moderate upper limit level.Secondly,a pension replacement rate model was constructed and the target replacement rates of the two basic pension insurances were measured,the study found that for the same level of contribution,the pension replacement rate of the employment insurance was higher than that of the urban and rural residential insurance,which means that it will be more cost-effective for flexibly employed people to join the employee pension insurance.Again,policy simulations are conducted by adjusting the relevant parameters affecting the pension replacement rate,and the results showed that under the assumptions of gradually adjusting the contribution bands,the number of years of contribution,the rate of return on individual accounts and the rate of wage growth and introducing a pension adjustment mechanism,the pension replacement rate achieved different levels of growth,at the same time,the best insurance scheme for different income groups was proposed,and the feasibility analysis of financial affordability and individual contribution affordability was conducted for the simulation scheme,and the results showed that the simulated best insurance scheme is operable to a certain extent.Finally,taking into account the actual situation of pension insurance participation and simulation results,this paper suggests eleven aspects to improve the level of pension security for flexibly employed people: additional contribution bracket rates to match the income level of flexibly employed persons,appropriate extension of the contribution period for flexibly employed persons,increasing the rate of return on individual accounts for basic pension insurance,establishing a long-term and stable mechanism for adjusting basic pensions,innovative criteria for determining the labour relations of flexibly employed persons,appropriately relaxing the conditions for flexibly employed persons to make supplementary contributions to the basic pension insurance of employees,expanding the scope of government subsidies available to flexibly employed people,changing the concept of participation of flexibly employed persons,breaking down the household registration barrier for flexibly employed persons to join the insurance scheme and optimising the transfer procedures,improving the suitability of personal pensions and flexible employment for the third pillar of pension insurance,innovative commercial pension insurance models exclusive to the flexibly employed.