if you were told that the accumulated balance of your current pension would be exhausted in 2035, how would you plan your pension? For those who are still working, on the one hand, they have to work hard to pay their pension, on the other hand, they have to face old age when they are old. The current situation in China is really worrying.
The results of the actuarial report on China's pension from 2019 to 2050 (hereinafter referred to as the 'report') released by the world social security research center of the Chinese Academy of social sciences on April 10 show that under the benchmark situation of 16% enterprise contribution rate, the basic pension insurance fund for urban enterprise employees in China will have a current deficit in 2028, and the accumulated balance will be exhausted in 2035.
Industry experts said that in recent years, the state has taken a series of measures in the reform of the old-age security system, but the reform process is still facing arduous challenges. The decline of the payment rate of social security enterprises may become an opportunity for the development of the second and third pillars of the old-age security system.
The accumulated pension balance will be exhausted in 2035
The report predicts that under the benchmark situation, the current balance of the national urban enterprise employees' basic endowment insurance fund will start to accelerate diving after barely maintaining a positive number for several years from 2019 to 2050, and the deficit scale will become larger and larger. Specifically, the total current balance in 2019 was 106.29 billion yuan, which increased to 2022 for a short time, and then began to decline from 2023. In 2028, the current balance was negative for the first time - 118.13 billion yuan, and finally dropped to - 11.28 trillion yuan in 2050.
It is worth noting that the balance of the current period is estimated in the case of 'large caliber' (including financial subsidies). If we do not consider financial subsidies, that is, in the case of 'small caliber', the current balance will be negative in 2019, and it will decline faster, reaching -16.73 trillion yuan by 2050.
Under the "big caliber" policy, the accumulated balance of the national urban enterprise employees' basic endowment insurance fund in 2019 is 4.26 trillion yuan, which will continue to grow, reaching a peak of 6.99 trillion yuan in 2027, and then begin to decline rapidly, and the accumulated balance will be exhausted by 2035.
According to the calculation of the report, when the enterprise contribution rate is 16%, only from the perspective of the system support rate (regardless of the improvement of per capita treatment), the payment pressure of basic endowment insurance for urban enterprise employees is increasing. In short, in 2019, nearly two payers will support one retiree, while in 2050, almost one payer will need to support one retiree.
There are still arduous challenges in the reform of the old age security system
In fact, in terms of the reform of the old-age security system, China has been making efforts to develop in the direction of multi pillar and multi-level balanced development.
Su Gang, Secretary of the Party committee and chairman of the board of directors of Changjiang Endowment Insurance Co., Ltd., said at the recent seminar on the situation of endowment insurance fee reduction that reviewing a series of measures taken by the state in the reform of the endowment insurance system in the past few years, whether it is the market-oriented operation of the basic endowment insurance fund, the transfer of state-owned capital to enrich the social security fund, or the establishment of basic endowment insurance by government organs and institutions And the occupational pension system, the tax deferred commercial pension insurance pilot, and the social security fee reduction measures recently launched - each step of the reform is a pull and move the whole body, causing widespread concern of the whole society, which shows the firm determination of the decision-makers to reform, but also shows the arduous task of reform.
However, in his view, with the accelerating process of population aging, the reform of China's old-age security system has begun to enter a deep-water period, and the reform process of the old-age security system is still facing arduous challenges.
We should also see that the inherent characteristics of China's aging, such as & lsquo; getting old before getting rich & lsquo; regional imbalance & lsquo; unclear sense of responsibility for the elderly & nbsp; and so on, have added more obstacles to the development of pension security. 'su Gang said.
He believes that the main challenges are the insufficient reserve of pension assets, the unbalanced structure of pension security system, and the lack of people's awareness and knowledge of providing for the aged.
Specifically, in terms of pension asset reserve, the data show that by the end of 2017, China's Pension Reserve balance was 8.5 trillion yuan, accounting for 10.3% of GDP, while the United States' Pension Reserve accounted for 160% of GDP in the same period. At present, the subsidy of fiscal funds to pension expenditure is still expanding.
Although China has proposed to develop the three pillar pension system for many years, and the second pillar has been developed for several years, the first pillar is still dominant in China's pension security system; the development speed of the second pillar enterprise annuity has slowed down significantly in recent years, with the coverage of enterprise annuity only about 7%, and the occupational annuity is still in its infancy, while the coverage of American enterprise annuity system is more than 60%; Last year, the third pillar of China's tax extended pension financial products just began to pilot.
According to the data that China first finance and economics learned exclusively from the industry before, as of the end of February, 16 insurance companies carrying out the business of individual tax deferred commercial endowment insurance had realized a total premium of less than 100 million yuan, which was lower than expected.
In terms of people's awareness and knowledge of providing for the aged, Su Gang said that although China is a big saving country, it is not an institutional saving for providing for the aged. Deposit, bank financing, treasury bonds, real estate and other traditional financing methods are still the mainstream of residents' Pension Reserves. Even though some people begin to wake up their financial intention, many elderly people are easy to fall into the trap of financial fraud due to the lack of financial knowledge.
Cost reduction or development opportunities for two or three pillars
At the just concluded national "two sessions", the government work report put forward the reform measure that the payment rate of endowment insurance units can be reduced to 16%. Li Peilin, former vice president of the Chinese Academy of Social Sciences and President of the Shanghai Research Institute, said that fee reduction is good for economic development and people's livelihood, but these will accelerate the consumption of basic endowment insurance funds. If population aging is added up, we can imagine that the financial sustainability of China's basic endowment insurance system will become more prominent.
The unbalanced development of the three pillars and the increasing pressure of the first pillar show the urgency of developing the second and third pillars as soon as possible. Although the current development of the second and third pillars is not good, many experts in the industry say that with the first pillar enterprises paying lower fees, it may create development opportunities for the second and third pillars.
Ouyang Juhua, assistant to the president of China Life Endowment Insurance Co., Ltd., said at the above forum that if the original payment level is high and many enterprises' crowding out effect is great, there will be no room for the development of the second and third pillars. After the payment level of the first pillar is reduced, there will be certain opportunities for the second and third pillars. But at the same time, he said, the size of the opportunity is also related to the duration of the fee reduction policy, as well as the subsequent supporting policies for the second and third pillars.
Li Yimei, general manager of Huaxia Fund Management Co., Ltd., said that in a sense, if the first pillar reduces fees and at the same time, the second pillar and the third pillar have very big policy or practical actions, then in the long run, the second and third pillars will become an important supplement to the first pillar. She believes that if we can effectively guide some funds from one pillar to two pillars through marketization, it will have a better role in promoting the three pillars of the whole pension security system.
A number of people in the industry said that with the expansion of the third pillar tax extension policy pilot outside the insurance industry, banks and fund companies have also launched similar products. After the expansion of supply, more people will participate and the market will slowly expand. However, it also means the further increase of competitive pressure for the market participants.