Perhaps, for a shares, the biggest news after hours on April 2 is "BOCOM's response to the reduction of social security Holdings". So how do you view the reduction of social security funds in bocom? The social security fund plans to reduce its holdings by no more than 1% of the total number of ordinary shares currently issued by Bank of communications within three months and by no more than 2% of the total number of ordinary shares currently issued within six months. According to the current share price of BOCOM, the scale of reduction is about 9 billion. Will this have a huge impact on the market? If it is a case in point, the impact is indeed small; but if it is not, the potential impact is huge.
The general pattern of tax reduction and fee reduction is as follows:
Since the 19th National Congress of the Communist Party of China, supply side reform has continued to advance. This year, one of the priorities is to reduce taxes and fees, which is "three reductions, one reduction and one subsidy". Among them, this fee includes social security rate.
Starting from May 1, the payment proportion of basic endowment insurance units for urban employees will be reduced, from 20% to 16% in all localities, so as to effectively reduce the payment proportion of enterprise social security.
Generally speaking, social security expenditure is rigid and cannot be cut without reason (so many people are waiting for pension). However, reducing the social insurance premium rate is bound to lead to the decline of social security income in the short term. The part of income decline will form a gap. If the past income and expenditure account is slightly rich and the gap is smaller than that of wealth, then the decline of income will not have a great impact. If the gap exceeds the affluence, there will be a 'deficit', and we need to find a way to balance the income and expenditure. One way is to rely on financial subsidies; the other way is to spend the money in stock, that is, the stock assets managed by the social security fund.
Therefore, we can ask a new question: is the social security rate lowered enough to use the existing assets?
Basic information of social security revenue and expenditure:
In order to answer the above question, we have to look at the basic situation of social security revenue and expenditure,
Figure 1: surplus of social security revenue and expenditure
Since 2003, the annual surplus of social security revenue and expenditure has been expanding, from more than 50 billion in 2003 to more than 800 billion in 2018. But the problem is that with the advent of aging, social security expenditure increases faster. If we divide the surplus by expenditure, we can get the following table.
Figure 2: proportion of social security surplus to social security expenditure in the current year
The proportion of surplus to expenditure has dropped from the highest 40% to around 12.48% in 2018, and the protection cushion is already very thin. Therefore, reducing the social insurance premium rate is bound to cause great pressure on the balance sheet of social security.
The challenge of the social security fund will be reduced from 20% to 16% of the original requirement, which will be reduced by 4 percentage points at one time. It is estimated that the burden of enterprise social security payment will be reduced by 800 billion yuan. --Zhang Yiqun, vice chairman of the Performance Management Research Committee of the Institute of Finance
If the experts estimate that there is no problem, if the enterprises reduce the burden of 800 billion, they can just offset the surplus of social security revenue and expenditure of about 800 billion - the social security revenue and expenditure is just even. But it's dangerous just to draw.
In an aging society, social security expenditure increases faster than social security income. It will lead to the imbalance of our social security revenue and expenditure: we have to rely more on financial subsidies, and we have to spend the money we saved before.
So, is there a lot of money saved in our social security fund account? The absolute amount is quite a lot, but relatively speaking, it is worrying. In 2017, the stock assets of the social security fund was 2.22 trillion, and the social security expenditure in that year was 4.87 trillion, accounting for only 46% of the expenditure in that year. If we follow the idea of fixed principal and only income, then 10% of the investment income can fill 4.6% of the annual expenditure gap. Whether it's enough or not depends on people's opinions.