Search

Pensions are in short supply in some areas of China. How can China fill the pension funding gap? What is the solution to it? For the purpose of further enhancing the sustainability of China's social security fund, this paper focuses on China's pension funding gap, considers the complexity and reliability of the factors affecting pension payment and analyzes the correlation between fund income and financial subsidy with the regression model. ANOVA is a significant test of correlation coefficient. The result shows that the original hypothesis is significant at the level of 6%, so there is a linear relationship between fund income and financial subsidies. Based on domestic and foreign academic literature as well as domestic policies, the paper proposes to optimize the path of the pension payment system. Firstly, the replenishing of China's pension funding gap depends on a matched capital scale and partial funded scheme. Secondly, the growth rate of pension funding will decline if government slows down its allocation of subsidies. In such a condition, increasing pension participation can help reduce the spending pressure. Thirdly, the problem of pension funding gap can be solved from three levels. For the government, at the macro level, reform pension system to balance interests; at the micro level, establish a third pillar pension system, separate redistribution of income from mandatory contributions and innovate China's pension insurance system; at the international level, build global pre-fund investment channels, and set up an efficient mechanism to ensure that investment return justifies risk appetite.