China's enterprise employee public pension has been facing various problems cannot be avoided since the establishment. Such as: individual account assets are not real, a huge amount of financial subsidies, etc. Another aspect, the contribution and tax burden of enterprises and employees is too heavy. The government proposed a series reform direction of the China's enterprise employee public pension for this problem: reform the individual account, reduce the contribution and tax burden, achieve the reasonable allocated to the public pension of state capital. Combined with the problems above, this paper tries to build up a general equilibrium overlapping-generations model to study the China's enterprise employee public pension , and tries to introduce factors of empty account of individual, reasonable allocation to the public pension of state capital into the model. We examines the effects of policy variables and found that the adjustment of exogenous variables such as contribution rate, the tax rate can optimize the pension system and its economic impact. In order to further study the optimal adjustment path of exogenous variables and the optimal adjust target, this paper get the optimal adjustment path of contribution and tax rate from the perspective of social welfare maximization: 1. Reduce the firm contribution rate can raise the optimal individual contribution rate with a elasticity of substitution of 0.99. The sum of the contribution rate will still be lower than the current level. The elasticity of substitution will raise to 1.38 with the decline in the population. 2. Increase the individual contribution rate can decrease the tax rate with a elasticity of substitution of 0.22. The elasticity of substitution will reduce to 0.07 with the decline in the population. 3. The optimal total contribution rate reduced by 1.5 percentage points after the nominal reform of individual account, and the optimal tax rate reduced by 1.3 percentage points after the reform. So the nominal reform of individual account can help to further reduce the tax burden charges.
