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Thinking of our pension fund hidden debt "plan funded debt"

Author: WangWei From: www.yourpaper.net Posted: 2007-11-19 18:01:58 Read:
Review of the history of our program funded debt "solve the implicit pension debt Abstract: by reference to the actual data, and reference to the view of some economists, think about the reality of the problem and explain in theory, and finally focuses made a careful discussion of the run program funded.

Keywords: implicit debt of the pension insurance fund allocation of state-owned assets

"In order to tide over the upcoming peak of population aging, the Chinese government in 1997 decided to PAYG old-age insurance system for long-term implementation of the new pension insurance system is a combination of social pooling and individual accounts, which appeared implicit debt of the pension insurance issues. implicit debt consists of two parts: in part, should continue to be paid to the new system implementation before retired personnel total retirees; another part is to work on the new system before the implementation of the retirement of officers after the implementation of pension rights accumulated prior to the implementation of the new system. "(Song Xiaowu, Zhang Xin-mei, 2000) would have to solve the implicit debt can have a lot of ways, such as: the issue of" recognition bonds ", which would be: the liquidation of each of the old insured persons under the system (including the "elderly" and "human"), the amount of pension accumulated in the termination of the old system to a point in time; "recognition bonds" issued by government modeled on the current national debt issue, each of the old system workers under the amount, the term and interest rate of clear government "recognition bonds" in their retirement to pay old-age social and pension insurance agency, unified by the social insurance institutions to apply for payment to the financial sector, and is responsible for a monthly or annual payment of pension gold "recognition bond" in the amount determined by actuarial. You can also gradually increase the Government's fiscal subsidy on pension insurance expenditures. I think of progressive reform and political factors (the ruling party think we should concentrate on doing economic construction, "giving priority to efficiency, after Gugong Ping, stability overrides everything" point of view), the allocation of state-owned assets, to repay the state-owned enterprise workers pension implicit debt most feasible (hereinafter referred to as the "program funded debt"), this point of view in the early 1990s by the domestic part of the economists and theoretically, the argument , but has not been able to effectively put into practice. In 2001, the central government has decided to approach holdings of state-owned shares of listed companies responsible for repayment of the implicit pension debt of state-owned enterprises by the newly established National Social Security Fund Council, upon the introduction of the reduction program, however, was the stock market investment by fierce opposition, and had an emergency brake. After the 16th Party Congress, the state-owned assets management system started, "draw-owned debt problem is a matter of something to look forward to once again become a topic, but we can find a way to make the satisfaction of the parties operating in doubt .

A proposed program funded debt problem and evolution

In the early 1990s, the domestic part of the economists in the discussion of China's market economic system reform framework design proposed pension social security transfer of functions from the enterprise, as a part of state-owned assets from the past allocated out by the state-owned shareholding institutions entrusted with the operation (Zhou Xiaochuan, Wang Lin, 1993) accumulation fund pre-chip system formed by the accumulation of funds and medical funds. Before the reform and retired personnel, according to the government's formula regularly from the units of pension; reform, this part of the present value of pension after the Government to bear the implicit pension debt. Different institutions have different estimates on the scale of this hidden debt, the minimum estimate is 1.9 trillion yuan (World Bank, 1996), the maximum estimate is as high as 7.6 trillion yuan (State Commission for Restructuring, 2000).
Reform program in the mid-1990s, however, have avoided in the implementation of the new system on how to repay the debt problem. The two reform program in 1995 in the design of the system is already retired when the transition of workers ("the old man"), working employees (human ") and thereafter to participate in the work of the new workers (" new ") coverage under the same basic old-age insurance scheme in the financial technology adopted by the social plan Manpower part of the accumulation to the personal account of the "human" and "new" way of borrowing money to pay for the elderly pension coverage under the same plan, thus forming a personal "empty account". According to statistics, "empty account" current accumulated nearly 500 billion yuan. Nevertheless, the basic old-age insurance scheme would appear from the 1998 year income over expenditure of, so the central government had to be used to fill the gaps in the scale of tens of billions of dollars a year from the fiscal revenue . In 1997, the central government had tried to compulsory national co-ordination and other measures to solve the problems exposed by the basic old-age insurance scheme, but have not been able to achieve.
In the case of these efforts were not effective, the relevant government departments, the theory of the policy community a variety of ideas, including the introduction of a social security tax to non-state-owned enterprises to expand the coverage of basic pension insurance. After a big discussion in 2000, the State Council made the decision to reduction of 10% of the state-owned shares and the central budget financing of special funding to compensate for the implicit pension debt, and in charge of the establishment of the National Council for Social Security and The operation of this part of the assets. Program of state-owned shares, however, once made, will be met with fierce opposition from stock market investors, had emergency brake umbrella June 2001. State-owned shares of the emergency brake also makes the National Social Security Fund Council interrupt sources of funds, and not only that, the National Social Security Fund has not formed a clear spending needs.
After the 16th Party Congress, the central authorities have decided to reform the state-owned assets management system, based on the administrative level hierarchical management of state-owned assets. In this case, how to repay the implicit pension debt problem re-surfaced. Jinglian and other economists believe that the levels of state-owned assets management, part of state-owned assets should first be allocated to the operation and management of the National Social Security Fund Council, dedicated to the of compensation implicit pension debt (Jinglian Justin Yifu Lin, 2003).
The interests of the National Social Security Fund Changes table (unit)
This year the number of the number of last year
The interests of the social security fund beginning balance 124,185,585,264.36 80,509,668,637.84
Social Security Fund incoming, outgoing,

Social security funds credited to the amount of 4,908,431,759.79 47,685,138,526.84
Social Security Fund amount ; 6,109,200,000.00
Social Security Fund credited,
To allocate fund equity
Changes in the amount of 4,908,431,759.79 ; 41,575,938,526.84

Third, the social security fund operational activities

The social security fund operating income 3,407,048,211.11 2,099,978,099.68

Social security fund operating expenses 304,713.77
The social security fund operational activities
The fund interests movements 3,406,743,497.34 2,099,978,099.68
Fourth, the social security fund equity
Ending balance 132,500,760,521.49 ; 124,185,585,264.36
Including: risk reserve balance 1,298,078,046.98 616,729,347.51

Laiyuan: The National Social Security Fund the Council http://www.ssf.gov.cn/main.asp?ColumnId=12 but author secondary editing. the
Second, several "zoned owned" by the idea

If the ultimate purpose of the allocation of state-owned assets clearly defined in the repayment of the implicit pension debt, then the basic problem is caused by what the agency to receive the allocated assets. In fact, the allocation of state-owned assets should produce another role, that contribute to exit the competitive areas of state-owned assets, to help enterprises to establish a more effective corporate governance structure. Combine these two issues, the ideal situation should receive the allocation of the assets of the institutions can be effective while the repayment of the implicit pension debt, can play in the corporate governance role.
Allocated to the equity transfer of the National Social Security Fund Council, SSF almost certainly not become a qualified shareholder of all state-owned shares were allocated enterprises, in order to overcome this difficulty, the Social Security Council is bound to engage external asset management institutions to host option. There is another design ideas, about to part of the right to the benefit of state-owned shares given to the Social Security Fund Council, the SASAC still on behalf of the State to exercise the responsibilities of investor, but this seems to bring the same rights are fragmented, at the same time, the National Social Security Fund Council will only exist as a pension cash flow cashier institutions. Financial principles from the social security scheme, in terms of this case, the Council may not have sufficient reason to exist: If only cash payments and receipts, it completely by a now received a pay plan in place.
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