The complete fund system is a system based on the principle of vertical balance, which requires workers to accumulate and raise social security funds through savings during the whole employment or insurance period, or in a long planned period.

Under the complete fund system, on the basis of forecasting the future social security expenditure demand, we will determine a total average charge rate that can ensure the balance of income and expenditure for a long period of time, and adopt the method of taking it first and then using it. When the insured is on the job, he will pay part of his labor income to a fund at this rate; When accepting the guarantee, the Fund will honor the guarantee promise with the investment income.

[Editor] Problems and prospects of the whole fund system

Unable to cope with the impact of rapid population aging. From 1999 to 10, the number of elderly people over 60 in China has reached1260,000, accounting for about 10% of the total population, and has entered the ranks of aging countries. Population over 65 years old, 15 years old. The proportion of the 64-year-old population, that is, the support rate of the elderly population, rose from 8.7% in 190 to 10.2% in 2000, and is expected to rise to 15.5% and 310.2% in 2020 and 2050 respectively. Therefore, if the pay-as-you-go system is not reformed, the old-age insurance rate will reach 39.27% by 2033. Such a high contribution rate is unbearable for enterprises, which will lead to the crisis of pension payment and greatly affect the international competitiveness of China enterprises.

1, which inhibits the enthusiasm of workers and enterprises and distorts the operating mechanism of the labor market. Under the pay-as-you-go system, there is no direct and inevitable connection between the pension insurance premium paid by the employee (and the employee on behalf of the enterprise) and the pension income he gets after retirement. Therefore, it actually creates a "tax wedge" between labor supply and demand, which will reduce the quantity of labor supply and cause efficiency loss. With the increasing contribution rate brought by aging, the efficiency loss will be even greater.

2. The coverage is too narrow, which is not conducive to giving full play to the role of "social stabilizer". The traditional old-age insurance system mainly covers the state-owned sector, but it is not enough for foreign-funded enterprises, collective enterprises, private enterprises and individual enterprises that have developed rapidly since the reform and opening up. According to statistics, 72.4% of the 214.85 million new jobs from 1978 to 1997 belong to non-state-owned sectors. From 65438 to 0996, the proportions of state-owned enterprises, collective enterprises and foreign-funded enterprises participating in endowment insurance were 95. 15%, 5 1.47% and 27.48% respectively. This situation is not conducive to the cross-departmental flow of labor and fair competition among different types of enterprises. The reason is that the age structure and historical burden of employees in non-state-owned enterprises and state-owned enterprises are different, and the system characterized by pay-as-you-go will lead to the redistribution of funds to state-owned enterprises to bear additional costs.

3. There is no separation between the administrative function of endowment insurance and the pension management function, which leads to the lack of effective supervision and checks and balances mechanism in pension management, and the phenomenon that pensions are misappropriated sometimes occurs, which affects the living security of retirees.

It is against this background that the State Council has issued a series of documents on the reform of the old-age insurance system in recent years, and decided to transition from the pay-as-you-go system to the partial accumulation system of "combining social pooling with individual accounts". However, in the specific implementation process, especially in the establishment of a fund system based on personal accounts, there are still some problems that need to be further studied and solved.

At present, the personal accounts established in China are largely nominal accounts, which is the so-called "empty accounts". Although compared with the traditional pay-as-you-go system, it has advantages in avoiding the distortion of the labor market and providing better payment incentives, it still belongs to the pay-as-you-go system in essence. It cannot provide real fund accumulation and fund operation income, so it cannot cope with the impact of aging. The reason is that the reform process has always avoided the source of the "elderly" pension, and still extracted funds from the account of the working generation to pay the "elderly" pension. We must solve this problem as soon as possible. The longer we delay, the higher the cost of reform. To this end, we can distinguish three different situations and deal with them respectively:

1. For those "old people" who have retired and employees who will retire in the next few years (for example, those over 50 years old), to stay in the old system, their pension payment still adopts the pay-as-you-go system, but the source of funds can no longer be paid by working people for personal accounts, so we must find another way.

2. For those "newcomers" who are about to take part in the work, it is easier to deal with. We should directly adopt the new system and implement a complete fund system. In addition, for employees who have worked for a short time (for example, within five years), due to the small amount of empty accounts, they can make compensation as soon as possible through government financing and make personal accounts.

3. For other employees, it is difficult for the government to withdraw the funds quickly because of the large amount of empty accounts if they are handled in full accordance with the "new person" approach. If we completely deal with it according to the "old people" method, the disadvantages of the old system will be inevitable, which will lead to long-term financial imbalance.

So these people can set up personal accounts from now on, and receive pensions one by one according to the account balance after retirement. At the same time, the government will issue a certain amount of pension every month according to their payment years under the old system as a supplement to their personal accounts.

[Edit] Features of a complete fund system [1]

So that the insured can accumulate funds when he is in office and receive insurance money on a monthly basis after retirement. The payment level is directly related to his salary and payment level when he is on the job, which can stimulate the enthusiasm of the insured to pay, thus realizing self-protection.

However, this method needs a stable economic environment and a good fund management level to ensure the preservation and appreciation of the fund and fulfill its guarantee commitment. Otherwise, the risk of maintaining and increasing the value of the fund is greater. This method does not have the function of intergenerational redistribution.

[Editor] Advantages and disadvantages of complete fund system

The reason why a complete fund system is widely respected is mainly based on the following reasons:

1, China's current tax burden is already very heavy. Under the pay-as-you-go system, any increase in tax revenue, even a little, will have a huge negative impact on economic efficiency. In contrast, fund-based social security only forces the younger generation to make some savings, which will not have any significant impact on capital accumulation, nor will it hinder the demand for capital for rapid economic growth.

2. From the macro-benefit, because the income from fund-based social security is directly used to purchase assets or investments, it can make better use of the unconsumed resources, which may promote the faster growth of GDP, thus improving the average living standard of the whole society.

3. From the perspective of incentive mechanism, the fund system links the individual contribution level with the individual income level, which makes the incentive effect of taxation prominent; Fund system can prevent moral hazard more effectively, and its negative impact on labor supply and employment is less than that of pay-per-view system; The fund system can promote individuals to actively participate in the supervision activities of social security funds, better prevent the funds from being abused, and so on.

4. From the understandability point of view, for the general insured, the fund system is easier to understand than the pay-as-you-go system, which is more in line with the spirit of the market economy, so it is easier to understand.

Compared with the pay-as-you-go system, the complete fund system also has defects, mainly in the following aspects:

1, a complete fund system cannot escape the risk of aging, but only transfers more risks to individuals. Although the fund system closely links everyone's payment and income, which is conducive to improving efficiency, it also exposes everyone to more risks, especially market risks.

2. Moral hazard still exists, but it mainly comes from fund managers. For the sake of social morality or fairness, the state will inevitably provide some protection for social security as the "last player", which will prompt fund managers to prefer risky portfolios rather than following the principle of moderate risks, and many funds may go bankrupt. After the fund goes bankrupt, the state will eventually bear part of the responsibility, which will increase the tax revenue and may form a vicious circle.

3. Compared with the pay-as-you-go system, the fund system is only a compulsory savings system and has no social adjustment or redistribution function.

[Editor] Comparison between Complete Fund System and Pay-as-You-Go System

1, the capital accumulation system has high returns. The income of capital accumulation system is the marginal income of national capital. In the United States, the actual portfolio return rate is 7%, and the marginal return rate of capital in China is higher than that in the United States. In addition, the implied rate of return under the pay-as-you-go system should be the sum of population growth rate and productivity, which is about 3% in the United States and higher in China. The income under the pay-as-you-go system is always lower than the marginal income of capital under the capital accumulation system.

2. Pay-as-you-go system distorts tax revenue, and the tax system under fund accumulation system needs to be improved. Under the pay-as-you-go system, retired employees can get an average of 60% of their final income at work, of which 25% comes from pay-as-you-go social security benefits: for those who have worked for 40 years, the annuity in their personal account accounts accounts accounts accounts for 35% and can be bequeathed. Under the partial accumulation system, social security funds are deducted from wages, employers pay about 20% of wages, and individuals pay 8% of wages, which is a very high payroll tax. China pays twice the tax rate as the United States, but it still feels short of funds. What is the reason? Because the so-called 28% tax rate is actually only 1/3. Social security funds are not levied as taxes, and it is not illegal to evade, so the enforcement is very weak. Moreover, the tax base is calculated according to the salary of officials, which is much less than the actual cash income. At the same time, it is difficult for the informal sector to collect social security taxes. In addition, among the 28 percentage points of contributions, only 8 percentage points directly benefit individuals, and the rate of return of this part is very low, and the other 20 percentage points enter the social security plan as a whole. Most of the funds enter the overall planning, which means that paying social security funds is income tax, so individuals and factories have the motivation to evade taxes.

Although the complete fund system has many advantages compared with the pay-as-you-go system, it cannot solve the social security problems in China like the pay-as-you-go system. Therefore, when advocating more use of the fund system, we must pay great attention to what our purpose or requirements are, and give due consideration to China's basic social and economic situation. In order to establish a social security system that suits the basic national conditions and gives consideration to fairness and efficiency, it cannot be a 100% pay-as-you-go system or a fund system, but only a system that combines social pooling with personal accounts and has both advantages. At present, China's social security system combining social pooling with individual accounts has indeed encountered a lot of troubles, but what we should do is not to tear down and rebuild, but to gradually improve it, especially to find an appropriate combination of fairness and efficiency (or pay-as-you-go system and full fund system).