Analysis of the Factors Influencing the Level of Basic Pension Insurance in China based on Factor Analysis

Abstract

With the normalization of China's ageing population, the balanced regional development of pension insurance levels is a key concern for the Chinese government. The development process and level of each region is influenced by many factors, and there are serious differ-ences in the level of basic pension insurance. This paper selects relevant livelihood indica-tors and data from provinces, municipalities directly under the Central Government and au-tonomous regions from 2014 to 2020, and uses factor analysis method to study and analyze the indicators that have a greater impact on the level of pension insurance, classifying all in-dicators into two categories: economic factors and demographic factors. The results of the study found that the economic factors accounted for a greater weight, with the coefficients in the economic factors (consumption level of residents, GDP per capita, the amount of pen-sion insurance fund coverage, and the share of pension insurance fund) basically close to 20%, while the coefficients in the demographic factors (elderly population dependency ra-tio, participation rate) were closer to 10%. The weighting of the indicators affecting the im-portance of pension insurance are, in order of importance, the level of consumption of the population, GDP per capita, the amount of pension fund coverage, the share of pension fund, the dependency ratio of the elderly population, and the participation rate. The paper concludes that the overall level of basic pension insurance in China is low and disparate, and that disparities can be improved from both economic and demographic perspectives to pro-mote balanced development.