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Fund accumulation system









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发表于 2018-9-4 16:19:19 | 显示全部楼层 |阅读模式
The fund accumulation system is a nationally enforced personal savings plan, which is based on the principle of long-term vertical balance of payments.

1 Risk analysis under the fund accumulation system

1. Price fluctuation risk

The fund accumulation system emphasizes the free investment option for individuals, which will enable the insured members to pay higher economic and non-economic costs and investment choice risks. After all, residents' knowledge and information about financial investment is limited. Not everyone has the ability to choose the right investment and investment targets. In this way, some people will inevitably face the risk of investment choice mistakes. In fact, even if an individual has the ability to choose an investment, there is no guarantee that the investment of the selected trustee will not be mistaken. This problem is particularly acute under the condition that the capital market is not standardized.
Under the fund accumulation system model, this kind of investment risk is likely to cause a serious shortage of funds in the individual accounts of all members who are about to withdraw from the labor market in a certain period. In a situation where the government does not provide minimum income guarantees for individual accounts, a certain generation of retirees will therefore fall into poverty. In particular, if a personal account is the main source of pension, there is a greater likelihood of a large number of elderly poor. In this way, not only the government's social goals have not been reached, but it is also likely that the lack of total consumer demand due to the existence of a large number of poor people will drag down economic growth. At this time, the government has to passively expand social relief spending and alleviate the poverty problem of the elderly. However, because a whole generation of retired people need government funding, and they are quite concentrated in time, the sudden increase in huge fiscal expenditures is likely to cause financial difficulties that the government cannot predict.
It is precisely because of the huge investment risks in the capital market that so far, the public pensions of developed countries have rarely invested in the capital market, and the non-public pension funds that are active in the capital market are basically private. The public pension system in developed countries is basically a pay-as-you-go system, and only the balance reserve portion can be used for investment. However, even with these balance reserves, many countries only invest in risk-free investment products such as treasury bonds, and some countries issue special indexed bonds to guarantee the appreciation of funds. In the United States, it can only be used to purchase non-market circulation of government bonds. In major European countries, it is only equivalent to one or two months of payment. These practical experiences in developed countries are worthy of thinking about countries like China that have huge pension gaps and the construction of the securities market.

2. Reverse income distribution risk

The operation of the fund accumulation system requires specialized high-tech actuaries and financial experts, so the operating costs are high. In addition to transaction taxes and commissions for practitioners, there are significant internal management costs for fund managers. If it is a privately managed fund company, it will cost huge competition, advertising, and competition for human resources. These costs are fixed costs, so the more people with low incomes, the greater the proportion of operating costs, and the lower the net income after removing operating costs. This inevitably leads to a reverse income redistribution. On the one hand, the lower-income insured people get a lower rate of return and expand the income gap between individuals with higher and lower income levels. On the other hand, the public pension system is mainly for low- and middle-income people, and the huge operating expenses. In essence, the loss of public pensions flows from insured residents with lower incomes to financial practitioners, while the latter are mostly high-income groups in society. Therefore, if the purpose of the public pension system is to narrow the income distribution gap, then the fund accumulation system is contrary to the pay-as-you-go system.
For the high-income class, because the proportion of operating expenses is relatively low, large enterprises that can establish enterprise annuities can benefit the enterprise annuity to operate in the capital market; for most, they can only participate in the public. For the middle- and low-income people of the pension system, it is not cost-effective. This is especially true in developing countries. However, even in developed countries, it is one of the reasons why the public pension system does not choose the fund accumulation system.

3. Market distortion risk

The fund accumulation system has two forms of management: one is the Chilean model of private management, and the other is the central provident fund model of public administration. Both management methods may create market distortion risks, especially the latter.
The basic characteristics of the central provident fund model are: the fund is centrally managed by the state, the fund investment is operated by the state, and the state bears the minimum income guarantee of the pension fund. Since the state bears the risk of the minimum income guarantee of fund investment, the market-oriented operation of state intervention in the capital market is inevitable. Therefore, the entry of pension fund into the stock market will have a great negative impact on the capital market. First, it is contrary to the market economy system. The entry of pension funds into the market will trigger the potential for “social investment”, and the result of “social investment” will increase the factors of the command economy, and eventually lead to the “centralized planned economy”. Second, it will inevitably lead the government to intervene in the internal decision-making of listed companies. Once a pension fund becomes a major shareholder, the government may enter the board of directors of a listed company. Even if it does not enter the board of directors, it can use voting rights to exert its influence, directly or indirectly intervening in the “internal management” and governance structure of public companies. Third, it will lead to misplaced resources and nepotism. In the process of government investment, any institutional barriers such as “political market” and “capital market” are difficult to control the penetration of politicians into the capital market. They are often seen behind the winners and losers in the capital market. The shadow of politicians, it will lead to the proliferation of nepotism. Fourth, the pension fund market will lead to political goals instead of economic goals. The result of government investment often puts the government in a conflict of interest: as a conflict of interest between investors and capital owners, as trustees of pension assets and institutional regulators (Zheng Bingwen, 2004). These situations will distort the market allocation mechanism of resources, reduce investment efficiency and bring investment risks.
In addition to the above risk factors, under the fund accumulation system model, insured members also need to face the risk of asset depreciation brought about by inflation. Moreover, there are multiple commission-agent links in this model. Because of information asymmetry, it is easy to cause regulatory difficulties, breed corruption, and weaken public confidence in the public pension system. When the investment operation fails, the ultimate responsibility can only be borne by the government, which will also reduce the people's trust in the government and lead to political risks. If you invest in foreign capital markets, it also brings a lot of overseas investment risks.

2The impact of fund accumulation system on economic growth

We use the Solow economic growth model to examine the impact of the fund system on economic growth. Under the fund system public pension model, the individual's pension income is the return of the pension investment in the securities market, that is, the marginal rate of return of capital γ. This rate of return can be determined by the Solow economic growth model. If the per capita consumption maximization is the best standard for long-term economic efficiency, Solow (1956) derives the famous golden rule of economic growth in its growth model: when the capital growth rate in an economy equals population growth When the rate plus the growth rate of labor productivity, the economy is in the optimal growth path, and the interest rate at this time is the optimal interest rate for long-term dynamics. According to the Solow model, capital accumulation in an economy is transformed from profit, and workers consume their wages. Similarly, we consider an economy with a fund-based pension system. When the economic balance grows, each generation's pension savings is just the old-age consumption of the previous generation. The capital compensation is all converted into investment accumulation, so the capital growth rate is Marginal rate of return, when the economy is in the golden growth path, there are:
γ = f'(K * ) = dK / K = n g
From the above formula, we know that when the per capita capital accumulation is insufficient, because the marginal rate of return of capital decreases, the actual interest rate is greater than f'(K*). At this time, the fund system is adopted to increase capital accumulation and the economy tends to the golden growth path. Accelerate economic growth. Based on this conclusion, the “accumulation system” represented by Harvard professor Fairstein believes that if the savings rate of a country is lower than the gold rate, then the transition from the pay-as-you-go system to the fund accumulation system can not only Solve the financial difficulties faced by the pension insurance system, and increase capital accumulation, accelerate economic growth, and improve people's welfare. At this time, the pension system transitions from the pay-as-you-go system to the personal accumulation system, and the economic efficiency can be improved. The transition of the pension system is a reform to improve the efficiency of Pareto. In the real economic situation, the US residents' savings are unanimously considered to be insufficient. This is the main reason why the US economics community advocates that their country's pension system should reduce the proportion of the pay-as-you-go system and increase the proportion of the accumulation system in the system. .
From the above conclusions, it can be seen that there are three theoretical prerequisites for the fund accumulation system to promote economic growth: first, the fund system can increase savings; second, savings can be converted into investment; third, a country's savings rate is lower than the golden law level. . But the first two premises are not necessarily true.
It is undeniable that the fund accumulation system has a positive impact on savings. This is mainly due to the following reasons: First, the fund system reduces the taxation of young people while raising the tax rate of the elderly, which is equivalent to reducing the disposable income of the elderly and increasing the disposable income of young people. Since the propensity of the elderly is far greater than that of young people, this effect leads to a reduction in total social consumption and an increase in savings, which can lead to short-term economic growth (Kotlikoff, 1995). Second, although there is a substitution effect between compulsory savings and voluntary savings, compulsory savings generally do not completely replace individual voluntary savings. Although the fund system eliminates the political risk of frequent government intervention in pension security rules, which can lead to family choices to reduce private savings, the unique risks of the fund system are completely passed on to individual households, such as inflation risks and income uncertainty risks. The great uncertainty of wealth will force families to increase their savings in case of any eventuality, so personal savings will not be reduced by the same amount as pension income. Third, the existence of liquidity constraints limits the ability of individuals to borrow freely, meaning that individuals cannot consume in accordance with their consumption plans throughout their life cycle during the period when they need higher borrowing in their lifetime. Savings always increase private total savings (Davis, 1995). In addition, if the government chooses to rely on the product value-added tax to solve the financial problems in the transition of the public pension system, it will lead to the price increase of the current commodity, and increase the current consumption relative to the future consumption price, the family will inevitably delay the consumption. Choose more savings (Mitchell, 1996).

3 The role of fund accumulation system

Under the fund accumulation system model, the employer and employee's contributions are all calculated by the employee's personal account, which is accumulated year by year during the work period. The pension after the employee's retirement is determined based on the funds accumulated in the individual account and the investment income. Since pension benefits are entirely dependent on the accumulation of individual employee accounts, fund accumulation systems help employees to increase their awareness of protection, promote employees' hard work, and save more. The accumulated funds can be invested in the national economic construction, and the funds accumulated by individuals can guarantee future payment, and will not cause social contradictions of intergenerational transfer burden. However, the fund system focuses on the individual's internal fund balance and lacks the redistribution function. There is generally no fund transfer between members of the society, and it is impossible to achieve overall relief within the whole society. For low-income people, it may not provide basic Life security.


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