Social insurance fund refers to a special fund for paying social insurance benefits, which the state requires the whole society to establish through legislation in order to ensure a reliable financial guarantee for social insurance. Assets purchased with such funds and their value-added parts also belong to the scope of social insurance funds. Social insurance fund is a fund raised by the state for holding social insurance undertakings, which is used to pay insurance benefits and allowances enjoyed by workers due to temporary or permanent loss of working ability or job opportunities. The social insurance fund shall determine the source of funds according to the types of insurance and gradually implement social pooling. Employers and workers must participate in social insurance and pay social insurance premiums according to law. Social insurance funds mainly include five categories, namely: basic old-age insurance funds, basic medical insurance funds, industrial injury insurance funds, unemployment insurance funds and maternity insurance funds. In addition to the basic medical insurance fund and maternity insurance fund combined accounting, other social insurance funds are accounted for separately according to social insurance types. Social insurance funds implement a unified accounting system throughout the country. Social insurance funds shall be earmarked for special purposes, and no organization or individual may occupy or misappropriate them in any form.
Pay-as-you-go system is a kind of financing method which is based on horizontal balance and implemented in accordance with the prescribed income model, and social security institutions carry out social financing according to the required insurance amount. Generally speaking, employers and employees pay social insurance tax or social insurance premium according to a certain proportion of total wages. This financing mode requires that the expenses that a social security measure needs to pay in the current year or in recent years should be budgeted first, and then distributed to the units and individuals participating in social insurance according to a certain proportion, and then paid in the current year. This model generally determines income by expenditure, leaving no accumulation. The main advantages of this system are: adjusting the tax proportion or payment amount in time according to the change of demand, and maintaining the balance of payments; Policy orientation is relatively fair, emphasizing the redistribution function of social security system; Pay-as-you-go system doesn't need too much personal data, which is simple to operate and relatively low in management cost.