Over 5 trillion central adjustment of pension fund balance helps to optimize allocation

category:Finance
 Over 5 trillion central adjustment of pension fund balance helps to optimize allocation


The income and expenditure of pension funds vary greatly among different regions, which has always been the biggest threat to the full payment of pensions in various provinces. According to the pension fund data released by the Ministry of Human Resources and Social Affairs, the fund balance in the eastern economically developed areas accounts for a large proportion, and the phenomenon of the foundation fund income in the three northeastern provinces is more serious. Influenced by the unbalanced development of regional economy, labor force flows from the underdeveloped areas in the central and western regions to the developed areas. As the destination of labor force inflows, the developed areas have abundant pension contributions, rich pension insurance funds, low contribution rate, no historical recessive debt problems and pension gap problems. In the central and Western regions, pension pressure is greater, so the contribution rate is higher, and the burden of the government, enterprises and individuals is heavier.

The central redeployment system can effectively help poor provinces get rid of what Nax calls the vicious circle of poverty and increase pension fund balances. According to Nax, capital is the main obstacle to the development of developing countries, and the dual role of supply and demand will aggravate poverty caused by capital shortage. The pension fund also has the characteristics of vicious circle of poverty. The areas with low level of economic development, because of the labor endowment, the phenomenon of the pension fund can not meet its expenditure is serious. In order to cope with the pension gap, the government needs more financial subsidies, so the investment for economic construction will be less, and the Crowding-out effect of private investment will be caused by borrowing. Not conducive to economic development, resulting in stagnation of economic development, constituting a vicious circle. The role of central adjustment can liberate local finance, not be burdened by the pressure of pension funds, and can carry out more vigorous fiscal stimulus policies to promote local economic development.

The central redeployment system has also successfully improved the allocation efficiency of regional pension funds. Because pension fund accounts are not owned by local governments and cannot be used for local fiscal revenue and expenditure balance, pension funds in areas with large balances are often idle, while areas with serious fund gaps need more financial subsidies to compensate, which reduces the efficiency of resource allocation. Central redeployment can make the balance of pension funds more widely mobile allocation and reduce waste of resources.

In addition, in the increase of pension fund balance, the capital market value-preserving and value-added work is also important. According to the annual report of 2017 published by the National Council of Social Security Funds, the investment income of social security funds has reached 184.5 billion yuan, and the annual investment income has reached 9.68%. In the future, the investment targets of pension funds can make beneficial attempts in the direction of state-owned enterprise bonds, government construction bonds and Treasury bonds, so as to enhance the profitability of funds on the premise of sound investment.

Pan He Lin (Postdoctoral of Applied Economics)

Source: Han Yukun_NBJ11142, responsible editor of Beijing News