On April 21, the general office of the State Council issued the opinions of the general office of the State Council on promoting the development of individual pension (hereinafter referred to as the "opinions"), which indicates that China's third pillar individual pension system will gradually change from pilot to routine after four years. It is also an important content of building and improving a multi-level pension security system.
In an interview with China business news, many institutional figures and experts said that the establishment of the individual pension system has long-term and positive significance for China to build a multi-level and multi pillar pension insurance system and optimize the capital market structure.
Some fund managers predict that the implementation of the personal pension system may bring 18 ~ 20 trillion yuan of incremental funds to the pension market.
However, some professionals suggest that in the short term, the current incremental capital boost of the opinions to individual pension accounts and the stock market is limited.
low and middle income groups benefit
Sun Bo, chief pension wealth officer of Huaxia Fund, said that personal pension is a means of encouraging people to carry out self Pension Reserves through income tax preference in addition to the "basic pension insurance" in the five insurances and one fund. It is similar to the current special deduction policies for personal income tax such as children's education and supporting the elderly. The difference is that the money saved by the special deduction of personal income tax can be used at any time, but the money of personal pension tax preference should be saved in a special account for pension.
China Europe Fund said that from the perspective of positioning, individual pension is different from the first pillar of ensuring people's basic food and clothing and the second pillar of relying on employers for pension security, which is mainly positioned as individual supplementary pension. In terms of importance, with the deepening of China's aging, we urgently need to "reduce the burden" for China's first pillar and second pillar through personal pension, so as to realize the healthy and sustainable development of the old-age security system.
Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, told reporters that the "opinions" is the first document for the top-level design of China's individual pension system. Although it is still a rough structure, it lays an important institutional foundation for the subsequent formulation of individual pension Implementation Regulations or detailed rules. The document has at least four highlights.
The first highlight is the qualification and coverage of individual pension participation, which defines the object of our individual pension participation for the first time, covering all workers in China. This is the unity of the system and the fairness of the system.
The second highlight, in terms of payment methods and payment standards, fully reflects the low threshold, low cost and inclusive nature of the individual pension system. The document stipulates that the payment method of individual pension can be paid annually, quarterly and monthly. However, the annual payment limit cannot exceed 12000.
The low payment standard means that the personal pension is specially formulated for low - and middle-income people, which is highly targeted. The target population is not high-income people, or groups with enterprise annuity and occupational annuity, so it has good system inclusiveness.
The third highlight is the withdrawal time of individual pension and preferential tax policies. The document specifies that the individual pension must be withdrawn after retirement, and it is not allowed to withdraw in advance.
"Of course, with the exception of death, disability and emigration, these three cases can be withdrawn in advance." Dong Dengxin told reporters, "it is precisely because of this strict provision on the withdrawal time that individual pension accounts are eligible for the preferential individual income tax deferred policy. This is also the first time that our document stipulates a unified withdrawal time and individual income tax preferential policy for individual pension products."
accelerating the development of the third pillar
If we take the United States as an example, we will find that the second and third pillars occupy a very important position in the whole pension system.
Liu Lina, general manager of Postal Savings Bank Of China Co.Ltd(601658) assets and liabilities department, summarized several prominent features of the American pension system at a meeting in September 2021: the proportion of its three pillars is 1:6:3.
"The familiar accounts of 401k and 403B products have reached US $16 trillion, and these data are included in the second pillar; while the account scale under the third pillar of the United States has sprung up in recent ten years, reaching US $8 trillion." Liu Lina said.
The first pillar accounts for a smaller and smaller proportion of the entire pension system in the United States.
If the time dimension is lengthened, it will be found that in order to deal with the problem of pension, the state has long begun to issue relevant documents to encourage the development of the second and third pillars of pension.
Zheng Bingwen, director of the world social security research center of the Chinese Academy of Social Sciences, said publicly at the above-mentioned meeting that all policy developments of the central government in the past year and a half point to two key words: one is to consolidate the social wealth reserve in response to population aging; The second is to establish a multi pillar pension system, that is, to develop the second and third pillars.
In May 2020, the CPC Central Committee and the State Council issued the opinions on accelerating the improvement of the socialist market economic system in the new era, which proposed to "improve the sustainable multi-level social security system"; In November 2020, the central economic work conference and the government work report proposed to "standardize the development of the third pillar endowment insurance".
In January 2021, the office of the CPC Central Committee and the office of the State Council proposed to "increase the equity investment proportion of all kinds of pensions, insurance funds and other long-term funds and carry out long-term assessment"; In February 2021, Xi Jinping General Secretary proposed to "accelerate the development of multi-layer and multi pillar old-age insurance system"; At the two sessions in 2021, the outline of the 14th five year plan proposed to "develop a multi-level and multi pillar old-age insurance system".
long term incremental capital scale is expected
Dong Dengxin said that the fourth highlight of the opinions is that it has made clear provisions on the setting of individual pension accounts and investment custody.
Personal account is one account for one person, which is set independently and numbered uniformly. The opening of personal account can be in banks or other financial institutions. The payment of individual account shall be borne by the individual. The individual account shall be closed and accumulated and cannot be withdrawn at will. At the same time, the custody of individual account shall be designated as commercial bank. The investment object of individual account can be all the financial products of pension objectives developed by financial institutions.
\u3000\u3000 "If the individual pension system can be implemented and expanded, we can imagine that the individual pension scale of 1.4 billion people will be an astronomical figure. Because they are long-term investment and closed accumulation, such a fund will focus on equity investment and become one of the most important institutional investors in our capital market. The huge individual pension assets will provide a steady stream of financial support for our capital market The long-term source of funds will also lay an important material foundation for the slow and long cattle in our future market. " Dong Dengxin told reporters.
Li Zhan, chief economist of China Merchants Fund Research Department, is also optimistic that the implementation of the personal pension system can bring long-term funds to the capital market.
Li Zhan told the first financial reporter, "In the long run, the development of individual pension is conducive to the sustainability of the pension insurance system. The individual pension of the third pillar can form a real long-term fund compared with the pension funds of the first and second pillars. Under the incentive of fiscal and tax policies, more individual savings will be injected into the individual pension account in the future, which will help to cope with the pressure of population aging and supplement long-term and stable pension funds; on the other hand, the Ministry Compared with short-term investment, long-term investment through the cycle can guide the long-term and healthy development of the capital market.
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Xiong Kan, fund manager of Yinhua pension target fund, calculated an account. He said that under the preferential tax policies, the personal pension system encourages individuals to invest in long-term and sustainable savings, bank financial management, pension insurance, public funds and other financial products, which has the dual characteristics of policy support and personal rigid needs.
"We think it will guide the funds in these financial products to migrate to individual pension accounts." Xiong Kan said.
According to the Research Report of Huachuang securities, at the end of 2021, the total amount of public funds, bank financial management and insurance products exceeded 70 trillion, the savings deposits of urban and rural residents reached 89 trillion, and the Pension Reserve space reached 160 trillion yuan. Even excluding some repeated caliber, it will be more than 150 trillion.
Xiong Kan calculated that assuming that 10% ~ 20% of them are transferred to individual pension accounts, it is expected to bring a scale of 15 ~ 30 trillion to the pension market. From the perspective of market incremental funds, it mainly comes from the transformation of savings. Compared with the rate of return on savings, individual pensions may obtain higher returns. It is expected that the conversion rate is expected to exceed 20%, which can bring 18 ~ 20 trillion yuan of incremental funds to the pension market.
Another pension fund manager said in an interview with China Business News: "Statistics show that after the individual income tax reform in 2018, the number of individual income tax payers in China is about 65.12 million. In extreme cases, assuming that everyone is qualified to participate in the individual pension system, it can bring 781.44 billion yuan of incremental funds to the market every year. If 30% of the people participating in the individual income tax pay participate in the individual pension system, it will also bring about 234.4 billion yuan of incremental funds to the market every year."
In fact, over the past 20 years, the fund industry has a long history of participating in pension investment management. Huaxia Fund told reporters that the pension assets that have been invested and operated in the market include the national social security fund, enterprise annuity and some basic pensions, of which about 60% are invested and managed by the fund company.
A number of public offering institutions, including China Europe Fund, Yinhua Fund and Huaxia Fund, have also launched corresponding pension products.
Sun Bo told reporters that pension financial products can be divided into two categories: one is security type and the other is investment type.
Commercial endowment insurance has more prominent risk protection function, and bank financial management is also based on steady value preservation.
Public funds highlight the value-added of long-term investment. Because individual pensions have been accumulated for decades and face great inflationary pressure, public funds are more in line with investment needs.
"From the perspective of the United States, 90% of their personal pension of US $13.9 trillion is invested in public funds and stocks, and the total proportion invested in commercial insurance and bank savings is less than 10%. Therefore, if you are friends who are not a few years away from retirement, you can choose insurance or financial management, but for people who are more than ten or twenty years away from retirement, such as me, you should choose public funds with stronger investment attributes." Sun Bo said.
However, Li Zhan also said that the current incremental capital boost of the opinions to individual pension accounts and the stock market is limited.
He explained that China's preferential tax policies for the third pillar of endowment insurance are currently carried by tax extended commercial endowment insurance. Tax incentives enable pension funds to get more tax relief returns than simple pension savings. The current tax method is more attractive to high-income groups, while the marginal tax rate of low-income groups is too low, the income part included in the tax scope is too small, and the motivation to invest in commercial endowment insurance is insufficient.
"Therefore, on the whole, the incremental scale of individual pension accounts that can be improved in the short term is limited. It is expected that the incremental capital boost to the capital market will be limited. The development in the next three to five years will depend on the strength of policy support." Li Zhan said.
