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Allocation of state-owned assets and the repayment of the implicit pension debt

Author: WangWei From: www.yourpaper.net Posted: 2007-11-21 10:38:40 Read:
Allocation of state-owned assets, to repay the implicit pension debt of state-owned enterprise employees (hereinafter referred to as "program funded debt"), in the early 1990s by the domestic part of the economist theoretical argument, but have not been able to effectively put into practice. In 2001, the central government had 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, however, the reduction program as soon as it was the introduction of the the fierce opposition of the stock market investors, 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 .

First, the issues raised and the evolution of

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. After the Third Plenary Session of the 14th Party Congress, the pension system for urban enterprise workers introduction of personal accounts part Accumulation Pension System from the past are now closing the current pay-as-you-go system to a combination of social pooling and individual accounts, so pension implicit debt problems. 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).

May "draw-owned

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.

Another option is that the liabilities of the Social Security Fund Council by the SASAC, the claims of the latter to the former to form the assets and implicit pension debt creditor liabilities; directly allocated to debt in the form to the Social Security Fund Council, Social Security Fund Council will have to in order to assume the liabilities of the implicit pension debt. The implementation of this debt allocation scheme, the key problem is the social security fund must be realized the debt claims related assets as collateral to issue bonds, so the ultimate question is how to repurchase and payment of these bonds.

Between the equity allocation and debt allocation, perhaps 08 enough to identify a third way of transfer, that the Social Security Fund Council as a temporary shareholding institutions hold equity allocated, sold equity holdings in a closed period, control of the company after the equity is sold, the social security fund to the cash proceeds to repay pension liabilities, corporate control should be transferred from the SAC to the actual purchase equity investors mastered by the SASAC;

, Regardless of the pharynx attached to the implementation of the allocation, are also faced with another - a problem, claims that allocated by the National Social Security Fund Council - home ownership, or establishment of a number of social security in the country. Fund Council. In this regard, the possible trade-offs are the following two: First, on the basis of the state-owned assets management at different levels, may need to separate the establishment of each of the provinces (including autonomous regions and municipalities directly under the Central Government, the same below) a social security fund protection will, to receive the level of government-owned assets management institutions and to issue bonds based on the allocation of the debt of state-owned assets.

Secondly, do not consider the constraints of state-owned assets management system, take into consideration the needs of the central and provincial state-owned assets and ability to allocate the number of state-owned assets to total assets is secured by a certain mortgage rate bonds issued in phases, by the National Social Security Fund Council held the press over the allocated proportion allocated; the bonds investment income is divided into two parts: If the actual rate of return on investment at the agreed rate of return less than or equal to, according to the proportions allocated allocated to the provinces; return on investment is higher than the agreed The rate of return the higher portion can be used nationwide basic pension insurance income redistribution.

From the perspective of the capital market, we need to examine more than two choices. First of all, when investment vehicle supply is increased because the allocation, how to make effective investment demand while increasing? Second, the capital market is a market exists multiple equilibria, only a similar number of investors is large enough, will it be possible to form a partial equilibrium behavior of these investors. This means that multiple social security fund long-term investors to participate in the capital market will promote the stability of the capital market. This seems to support the first option. However, in the second option, the National Social Security Fund Council can choose enough investment custodian, the custodian of these investments behavior can be effective external supervision, these managed like people can constitute capital markets in the long-term stability of the power. Finally, a principle of behavioral finance investor diversification will help guard against systemic risk of the capital market, then, will allocate the assets of the investment into the existing market system, or open up new bond market, which approach is more conducive to guard against investment risk?
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