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Develop Commercial Pension Insurance and Improve the Pension System
2017-11-16
By Zhu Junsheng, DRC
2017-8-15
At present, China is facing some problems in terms of pension insurance such as insufficient total pension assets, imbalanced pension system structure, great pressure on the sustainable development of basic pension insurance, and relevant binding factors curbing the development of enterprise annuities.
The development of commercial pension insurance can increase the pension assets, improve the existing pension system structural imbalance, alleviate the pressure on sustainable development of basic pension insurance and make up for the insufficient development of enterprise annuities, all of which are of great significance for fleshing out the "three pillar" pension system, in other words the funds needed for pension insurance are pooled from government subsidies, collective grants and personal contributions.
The development of commercial pension insurance can increase the pension assets. First, the number of aging population in China is increasing, and the demand for pension insurance is constantly rising. The increased number of elderly people hopes to establish a multi-pillar pension system to increase the accumulation of pension assets. Second, the insufficient assets accumulation relating to pension system is difficult to meet the requirements of old-age insurance, which urgently call for the development of commercial pension insurance in order to increase pension assets.
The development of commercial pension insurance can improve the structural imbalance in the pension system. First, the accumulation assets of the three pillars are imbalanced with the government subsidies as the main pillar and collective grants and personal contributions play a less supportive role. Second, the structure of pension income is imbalanced. The proportion of government subsidies takes up the lion’s share whereas the proportion of collective grants and personal contributions is very low. In the case of the imbalanced structure of the three-pillar pension system, the income structure of retirees is simplex, and the burden of the state is heavy. Therefore, the development of commercial pension insurance and making it play a major role in national retirement income structure will help to flesh out the structural imbalance of China's pension system.
The development of commercial pension insurance can relieve the pressure on basic pension insurance. The basic old-age insurance for urban workers is solely dependent on government subsidies, which assume almost all pension liability, while facing more serious sustainable development pressure. First, the institutional maintenance rate is gradually increasing. Second, the payment rate of the insured is declining. Third, the basic old-age insurance has a heavy reliance on fiscal subsidies. Fourth, the current balance of the fund is weakening. China's basic old-age insurance is facing greater pressure for sustainable development. Therefore, we need to speed up the development of commercial endowment insurance, and alleviate the pressure of sustainable development of basic old-age insurance.
The development of commercial pension insurance can make up the deficiency of the development of enterprise annuities. First, the coverage of enterprise annuities is limited. The number of enterprises and people covered by enterprise annuities is relatively limited, which cannot play a supportive role. Second, the development of enterprise annuities is facing some new difficulties. In recent years, the number of enterprises covered by enterprise annuities is decreasing, the number of employees who have participated in pension insurance programs is limited and the increasing rate of accumulated funds is slowing down, and the future growth may decline further. The development of commercial pension insurance can make up for the deficiency of the development of enterprise annuities, and if we make it play its due role in bolstering the national retirement income structure, that would help to improve the structural imbalance of China's pension system.
