Significance of social insurance

First, social insurance can play the role of social stabilizer. The old, weak, sick, disabled, pregnant and disabled members of society are inevitable objective phenomena in any era and under any social system. Social insurance is to give appropriate compensation to members of society when they encounter this situation, to ensure their basic living standards and to prevent the emergence of unstable factors.

Second, social insurance is conducive to ensuring the smooth reproduction of social labor. Laborers will inevitably encounter all kinds of accidents in the process of labor, resulting in the pause of labor reproduction. Social insurance is to give necessary economic compensation and living security to workers when they encounter the above-mentioned risk accidents, so that the labor force can be restored.

Third, social insurance is conducive to achieving social equity. Due to the difference of people's education level and labor ability, the income gap will be caused. Social insurance can collect insurance funds through compulsory collection of insurance premiums, subsidize low-income workers or those who have lost their sources of income, improve their living standards, and achieve fair distribution of society to a certain extent.

Fourth, social insurance is conducive to promoting social progress. Insurance has the characteristics of mutual assistance, and social insurance can better reflect the spirit of mutual assistance and cooperation.

1. Pay-as-you-go system refers to a financial system in which the premiums collected in the current period are used for current payment, so as to keep the insurance financial revenue and expenditure roughly balanced. In addition to pension insurance projects, general social security projects adopt this financial system.

2. Adopting this system for endowment insurance has advantages and disadvantages. The biggest advantage of the pay-as-you-go system is that the rate calculation is simple, and at the same time, because there is no huge capital, there will be no pressure to maintain and increase value, and it will not be adversely affected by currency depreciation. But the shortcomings of this system are also obvious. We must always reassess the financial structure and adjust interest rates. Generally speaking, due to the aging population structure and the rigidity of welfare level, the rate is generally increasing day by day. At the same time, from the perspective of distribution relationship, in the aspect of endowment insurance, the pay-as-you-go system is essentially a redistribution relationship between generations, and the increase in rates will deepen intergenerational contradictions and cause political problems.

3. This system is a financial system that determines an average rate that can ensure the balance of payments in a long period of time after long-term calculation of related factors that affect the rate, and forms a social insurance fund with all the insurance premiums (taxes) collected. This financial system is widely used in the personal account plan of endowment insurance under the framework of enterprise annuity system and social insurance system.

The most obvious advantage of this system is that due to the accumulation of funds, the insurance premium rate can remain relatively stable in the case of aging population. But this advantage is based on the premise that the fund's rate of return is higher than the wage growth rate. The defects of this system are also obvious. First of all, a higher speed is needed in the initial stage of system operation; Second, the fund faces enormous inflationary pressure. If the fund is used properly, not only the social insurance system will benefit from it, but also the whole economy will benefit from the effective allocation of the fund. On the other hand, if the fund can't maintain and increase its value, the cost of this system is higher than the pay-as-you-go system.

This system is a mixture of pay-as-you-go system and total accumulation system. At first, its rate was higher than the pay-as-you-go system and lower than the full accumulation system. In terms of reserves, it will be higher than the pay-as-you-go system and lower than the total accumulation system.

6. This system is to find a middle way in meeting the aging population and the initial high premium system. The usual practice is to accumulate a small part of the premium paid by the original pay-as-you-go system in the personal account system, or increase the rate on the basis of the original system and accumulate all the incremental parts in the personal account system. This system also faces the problems of fund management and value preservation and appreciation.

7. China adopted this mixed financial system when establishing the social endowment insurance system in 1997, which is called the social endowment insurance system combining social pooling with individual account system.