A study of payment mechanism of flexible employment in pension insurance: from the perspective of families’ expected utility
(2.School of Economics, Liaoning University)
【Abstract】From the perspective of family, this paper examines the impact of families' expected utility on payment mechanism of flexible employment in pension insurance. The paper points out that risk aversion mentality of the insured, unexpectation of personal life cycle, the differences of local institution or policy, and the utility loss after delaying retirement are the internal mechanisms that restrict insured families’ expected utility and affect their insurance decision. According to the above four internal incentive mechanisms, three system schemes are designed, and an insured families' expected utility model is established. The quantitative analysis finds that the risk duration and risk degree of the insured family are positively correlated to the pay duration and pay level. However, the current system scheme is still incentive and becomes more incentive with the expansion of life expectancy. The scheme 1 should be adjusted timely according to long-time risk duration and high level of risk. The scheme 2, in some regions, improves expected utility but does not conform to the rule of endowment insurance development. The scheme 3 with a large relevant legal basis is the best choice leading to a win-win situation of the government and the families. With the above analysis, some relevant suggestions are put forward.
【Keywords】 pension insurance; flexible employment; rate of participating in pension insurance; families’ expected utility; life expectancy;
(Translated by LIU Jiao)
. (1) Calculated according to data of 2014 China Labor Statistical Yearbook. [^Back]
. (1) Data are from 2009 China Human Resources and Social Security Yearbook (the working volume). [^Back]
. (2) Rate of participating in pension insurance = number of flexible employees participating in workers’ pension insurance / number of flexible employees. Data are from China Statistical Yearbook and 2015 China Pension Report. [^Back]
. (3) Data are from 2011 and 2012 China Pension Report, and 2014 and 2015 annual report by China Social Insurance Fund. [^Back]
. (1) Urban employees’ pension insurance adopts different calculating methods for the “old employees,” “middle-aged employees” and “new employees.” However, subjects of flexible employees in pension insurance are new employees, so it is assumed that flexible employees are “new employees.” [^Back]
. (1) At present, earnings of individual accounts are calculated as per interest income of one-year deposit of the bank. [^Back]
. (2) Standards of invalidity pensions are different in different situations. Comparatively speaking, this group is of small number and great particularity, so they are not the focus of this paper. It is assumed the insured do not withdraw invalidity pensions here. [^Back]
. (1) See Article 18 of Interim Measures of the Basic Pension Insurance of Urban Flexible Employees in Hubei and Article 9 of the Decision of Sichuan on Improving the System of the Basic Old Age Insurance for Enterprise Employees. [^Back]
. (1) Data of 2014 World Health Statistics reveal that overall life expectancy in China had increased 6 years over the past 22 years, in which life expectancy of Chinese males had increased nearly 7 years. According to this speed, life expectancy of males can reach about 80 years old in 2035. [^Back]
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