The Perfection of Financial Subsidies for Urban and Rural Basic Endowment Insurance: Based on Research in Guangdong Province

The social security relies on public finance. However, the benefits of urban and rural basic endowment insurance in China have been at a low level since the establishment in 2014. This article explores the possibility of improving pension based on the view of public finance. By analyzing the status and fiscal subsidy policies of urban and rural basic endowment insurance in Guangdong province, the passage found that the fund supported endowment insurance for public finance was not a burden. Then, the ELES was used in the essay to estimate an appropriate level of pension based on the needs of the elderly and funding required could be afforded by public finance. Finally, it proposes some ways to optimize financial subsidies.


Literature Review
Regarding the financial subsidies of UREI, the academic community mainly discusses such issues as the appropriate pension, financial responsibility, and financial affordability. Xiumei Li, Chunlin Yao and Meizhi Duan believe that the financial subsidy for UREI should reach three levels of goals, namely, to encourage residents to participate in insurance, to encourage residents to increase their contribution levels, and to improve the level of residents' protection. The current financial subsidy is far from achieving the goal of "basic insurance" [2]. It is a real fact that the level of pension insurance is low and pension gold treatment needs to be improved. How to determine the moderate pension benefits? Scholars have done a lot of research on this. Lijian Wang and Xiaogang Ye [3], Zhonghai Liu, Lianyou Li and Minyan Peng [4], Shu Bian, Yana Sun and Ningxian LI [5], Peng Jing, Mingjun Chen and Qiuming Hu [6] have used the extended linear expenditure model (ELES) to separate basic consumption expenditures from total consumption expenditure as a modest level of pensions. Li Huang set the target pension replacement rate of UREI to 50% of the net income Y. N. Chen DOI: 10.4236/me.2020. 111013 142 Modern Economy of rural residents per capita with reference to employee endowment insurance [7]. Yi Shen believed that the lower limit of modest levels of pensions should meet the basic survival of urban and rural residents based on Engel coefficient standard [8].
Regarding the government's responsibility for endowment insurance, scholars have researched from various aspects. Changfeng Shang discussed the necessity of the government to participate in the construction of a rural social endowment insurance system from the aspects of asymmetric information in the private insurance market, narrowing the income distribution gap, the principle of equal benefits, and compensation to farmers [9]. Changyuan Li believes that the lack of government financial responsibility restricts the development of rural social endowment insurance in China, and the government's financial responsibility should be clarified [10]. Mengjie Long studied the relationship between collective subsidies and the participation rate of farmers, and believed that the strengthening of government responsibility is conducive to increasing the enthusiasm of farmers for participating in insurance [11]. Xiaoxia Gong believes that the public product nature of rural social endowment insurance requires government finances to give certain financial support [12]. Bin Yang used the amount of fiscal subsidy as an indicator of total government fiscal responsibility, selected 2013 population data, and used the extreme difference, extreme value ratio, standard deviation, and coefficient of variation to measure the difference, and found significant differences in local government financial responsibility for UREI, mainly due to the large difference in the number of insured persons in different regions and the difference in the subsidy methods of the central government to different regions [13].
To improve the basic old-age insurance benefits for urban and rural residents, the government is bound to increase capital investment. Is the finance able to afford it? Calculating from the national level, Peng Jing, Mingjun Chen and Qiuming Hu found that if the basic pension replacement rate was increased to 30.5% and the subsidy was given at 27.3% of the individual payment base, the finance could bear it [6]. Huoyun Zhu [14], Li Huang, Feng Luo and Hongmei Liu [15], Qiong Li and Yong Li [16] selected relevant data from Wenzhou City, Guangdong Province, and Hunan Provinces for research. They believed that the overall burden of financial subsidies for endowment insurance is relatively light and there is room for improvement, but there are significant differences in county financial affordability. In summary, scholars have studied UREI from various aspects. They basically reached a consensus that the current financial subsidy for UREI is low, and public finance has the ability to improve pension benefits. However, Scholars are still divided on the extent to which level of UREI benefits should reach. In reality, the modest treatment of urban and rural residents' endowment insurance in different provinces will vary due to different economic development and price levels, and there will be differences in fiscal subsidy policies for UREI due to different financial strength and population size. This article will conduct a detailed analysis of Guangdong Province.

Fiscal Subsidy Policies of UREI in Guangdong Province
The benefits of UREI consist of a basic pension and a personal account pension, The "Implementation Measures" stipulates that each region can raise the standard of basic pension according to the actual situation, but the increased funds must be responsible for each region. Except for Guangzhou and Zhuhai, which have their own payment levels and subsidy standards based on the conditions of this city, the rest of the prefecture-level cities made the same provisions with the "Implementation Measures" that issued by Provincial People's Government.
As shown in Table 1, Guangzhou and Zhuhai have streamlined their payment levels and increased their payment subsidies on the basis of the Guangdong Province's Implementation Measures. Moreover, Zhuhai City has transformed the fixed subsidy method into a proportional subsidy method, which is a very worthwhile practice.   Nevertheless, the elderly in Guangzhou enjoy the highest benefits, which is more than 100 yuan higher than Zhuhai. The pension in Huizhou is slightly higher than the provincial average, and which in Foshan is basically more than half of the provincial average. And the pension levels of Zhongshan and Jiangmen are almost the same as those of cities in eastern, western and northern Guangdong.

The Pension Levels of UREI in Guangdong Province
Based on the view of basic pension, taking the standard set by province as an example, it increased by 5 yuan, 10 yuan and 10 yuan from 2014 to 2017. Moreover, the rate of increase is very low, and no clear pattern.
In general, pension levels in Guangdong provinces are very different. The pension level in the Pearl River Delta region is generally higher than that in the eastern, western and northern regions of Guangdong. The pension level in the Pearl River Delta region is extremely uneven. Which in Guangzhou and Zhuhai are much higher than other cities? In addition, the province's basic pension lacks a normal adjustment mechanism. Although it has been increasing year by year, the increase rate is relatively low. The government's financial subsidy is an important source of funding for urban-rural endowment insurance. The disparity in pension benefits among prefecture-level cities is mainly caused by differences in fiscal subsidy policies. It can be seen from Table 1 and Table 2  There are obvious differences on the urban-rural residential security benefits in various regions of Guangdong Province. The level of pensions in most prefecture-level cities obviously cannot guarantee the basic living of elderly residents. What kind of treatment level is appropriate, increasing treatment and increasing financial subsidies will give how much burden to the finance? Next section will build a model and analyze it.

Construction of Extended Linear Expenditure Model
In

Data Collection and Modest Level Calculation
This article selects rural residents' eight major commodity consumption expenditure data in the "Guangdong Statistical Yearbook" to calculate the appropriate level UREI benefits in Guangdong Province. There are three reasons: First, there is no individual and age difference in basic living needs. In old age, they will continue to choose commodities when they are young [6]; second, conditional urban residents will choose to participate in urban employee endowment insurance. Urban residents participating in UREI are low-income people without fixed income. Their consumption level is close to that of rural residents. Third, there are currently more than 500 million people participating in the UREI nationwide, and rural residents account for more than 95% [17]. Therefore, in this article, it is reasonable to assume that the basic consumption expenditure of rural residents is equivalent to a moderate pension for older participant of the UREI.
In the "Guangdong Statistical Yearbook", rural residents are divided into five equal parts according to income. Consumption expenditure includes eight items: food, clothing, housing, daily necessities and services, transportation and communications, education, culture and entertainment, medical care, and other supplies and services. The modest treatment for urban and rural residents is a pension treatment that meets the basic living needs of the elderly. It should be an interval value, not too low or too high [18]. Based on the relevant studies, this paper regards the basic consumption expenditure for food as the lower limit of  Table 3.
According to the parameter estimation results in Table 3

Analysis of the Financial Burden at a Moderate Level of Pension
Through the measurement of the basic living needs of urban and rural residents in Guangdong Province, it was found that the UREI benefits in Guangdong Province could not guarantee the basic living needs of the elderly residents, or even meet the food needs of the elderly residents. Increasing treatment is the trend, but it cannot be increased blindly. We must consider whether the government can afford the increased financial subsidies. As shown in Table 5 On the whole, the financial burden coefficient is small at the lower limit of modest treatment, and the province's fiscal revenue is able to support the increase of UREI benefits to a level that meets the food needs of elderly residents. However, if the benefits are increased to meet the food, clothing and housing needs of elderly residents, in terms of the financial strength of Guangdong Province alone, it will be more difficult and requires the support of the central government.

Suggestions
Urban and rural residents' endowment insurance is a major livelihood project And finance has the ability to support pension benefits to a moderate level.
Based on the analysis above, the following suggestions are proposed.

Increase Fiscal Investment
The policy objective of the UREI is to "basic guarantee", that is, to meet people's basic living needs. Through the above empirical analysis, it is found that in addition to Guangzhou and Zhuhai, the pension treatment of other cities in Guangdong Province cannot meet the aged' need for food consumption. Improving UREI benefits requires increased financial input and a reasonable division of fiscal subsidy responsibilities at all levels, including two aspects: one is the basic pension standard, and the other is the individual contribution subsidy standard.
At present, provincial finance provides a certain percentage of financial subsidies only based on the minimum standards stipulated in the "Implementation Measures". The funds required to increase the basic pension and personal contribution subsidies are borne by the cities themselves, which undoubtedly increases the city and county finances burden. In particular, the cities with relatively backward economic development in the eastern, western and northern regions of Guangdong have weak fiscal budgets at the city and county levels, and are unable to afford the funds required to increase the UREI benefits. According to the rough calculations above, it is found that in terms of the province's financial resources, there is room for improvement in the level of old-age insurance benefits. Therefore, to improve UREI benefits, it is necessary to increase provincial financial investment and reasonably divide the financial responsibility of province, city, and county.

Establishing a Normal Adjustment Mechanism for Basic Pensions
The basic pension constitutes an important part of the UREI benefits. The economy is developing, prices are rising, and people's consumption expenditures are increasing. If the basic pension lacks a reasonable growth mechanism, the protection of UREI is bound to be weakened. Since 2013, Guangdong Province has repeatedly adjusted the basic old-age pension standards, but each time it increased by 5 or 10 yuan. The adjustment was relatively low and lacked a scien- rural residents' income growth, price changes, and basic pension insurance for employees, a national minimum pension adjustment plan for urban and rural residents was proposed in a timely manner. Establishing a normal adjustment mechanism for basic pensions is a trend of national policy. The Guangdong Provincial Government should refer to the national basic pension standards, combine the income of urban and rural residents, the price level, the adjustment of basic pension insurance for employees, and its own financial strength to establish a scientific and reasonable Basic pension adjustment mechanism. Before establishing a normal adjustment mechanism for basic pensions, it is recommended that the standard of basic pensions be raised to a level that meets the food needs of elderly residents, to ensure that participating residents share the fruits of economic and social development, and promote the healthy development of the basic pension insurance system for urban and rural residents.

Establishing a Dynamic Adjustment Mechanism for Payment Subsidies
According to the "Implementation Measures", public finance provide for a fixed subsidy for the contributions of insured personnel. If participant choose to pay at a level of 120 yuan to 360 yuan per year, the fiscal should give a subsidy of not less than 30 yuan per year, and if choosing a level of 480 yuan or more to pay, financial subsidy cannot be less than 60 yuan. This has led to the consequences of "reverse incentives". In actual situations, no matter whether the insured person chooses to pay 120 yuan, 240 yuan, or 360 yuan, he will receive a subsidy of 30 yuan, then people will be bound to tend to choose low-grade payment standards. Guangzhou government has streamlined payment levels and raised payment standards based on provincial regulations, but it has also adopted a fixed subsidy method. Residents in Guangzhou can choose seven payment grades, and the ratio of the financial subsidy to the payment amount is 1.5, 1.17, 1, 0.86, 0.78, 0.68, and 0.62 [19], which is equivalent to choosing a higher payment grade and obtaining less financial subsidies. In terms of payment subsidy, the practice of Zhuhai that changed the fixed subsidy to a proportional subsidy has important significance. At present, Zhuhai government provides financial subsidies to insureds according to 65% of the individual payment amount [20]. The government can reasonably determine the payment subsidy ratio based on the payment level selected by individuals and their affordability, which can people to choose higher-level payment standards to enrich their personal account funds.

Change the Regional "One Size Fits All" Subsidy
Guangdong Province is a large financial province in China with strong economic strength. However, it has been many years since the imbalance in economic development in various regions of the province, and the fiscal revenue gap between prefecture-level cities is very large. The financial revenue of Guangzhou and Shenzhen has been far ahead, and the two cities of Foshan and Dongguan have fiscal revenue of has been lower than some cities in eastern, western, and northern region of Guangdong Province in recent years. At present, the financial subsidies for the maintenance of old-age pensions in the urban and rural areas of the Pearl River Delta region are all borne by the city and county finances, and the provincial finance does not provide any support. This "one-size-fits-all" subsidy method ignores the fact that the economic development of the cities in the Pearl River Delta region is uneven and the fiscal revenue gap is large. The differences in the financial strength of the cities in the Pearl River Delta have resulted in differences in the treatment of UREI. This inequity will cause people to experience psychological gaps, and the "one-size-fits-all" financial subsidy method will undoubtedly deepen the institutional defects. To change the "one-size-fits-all" subsidy policy, that is, to change the pattern of differentiating financial subsidies by geographical location, different subsidy policies can be formulated according to the level of economic development, the status of fiscal revenue, the number of participants, and the degree of population aging. In the future, by gradually increasing the overall level of the basic pension insurance fund for urban and rural residents, within the scope of the overall planning level, measures such as a unified system framework, unified payment grades and standards, and unified payment standards will be used to ensure that urban and rural residents enjoy relatively fair basic pension insurance rights.

Conclusions
In in Guangdong from the following four aspects: increasing financial input, establishing a normal adjustment mechanism for basic pensions, establishing a dynamic adjustment mechanism for payment subsidies, and changing regional "one-size-fits-all" subsidies. Among them, the establishment of a normal adjustment mechanism for basic pensions is the key to achieving the "basic guarantee" goal. The adjustment of the basic pension should provide a higher level of protection for the elderly residents without losing economic efficiency. In the long run, the establishment of a scientific adjustment mechanism can appropriately reduce the financial burden. In addition, the adjustment range and timing of the basic pension should be stable to maintain the sustainability of the system, as well as people's trust and support for the system.

Conflicts of Interest
The author declares no conflicts of interest regarding the publication of this paper.