Recently, relevant policies on entering the market for personal pensions have been introduced intensively, which has attracted close attention from all parties.
Among them, one of the most popular market attention is that the latest policy clarifies tax deferred discounts with a limit of 12,000 yuan per year. So how attractive is this tax incentive to residents establishing personal pension accounts? How to attract more residents to participate in personal pension plans and expand the scale of personal pensions?
In addition, how should bank wealth management subsidiaries accelerate pension financial product innovation in the future and enrich personal pension investment options? What other measures can other parties take to accelerate the entry of personal pensions into the market? Many issues need to be explored.
has entered the substantial implementation stage
World Bank proposed a three-pillar system for pensions in 1994, and personal pension metal is the third pillar of pensions.
1994, the World Bank issued a report "Preventing the Aging Crisis - Policy to Protect the Elderly and Promote Growth", which clearly proposed a three-pillar system of pensions: the first pillar is the public pillar of mandatory tax financing , that is, public pensions, which adopt a pay-as-you-go system; the second pillar is the professional pension paid jointly by enterprises and individuals; and the third pillar is the pensions provided by the government to voluntarily participate in the name of individuals, that is, personal pensions, including insurance, fund , trust, financial management and other forms.
The construction of personal pensions in my country started late, and the pilot project of personal tax deferred pension insurance began in May 2018. However, market analysis said that at that time, due to many factors such as low tax saving efforts and cumbersome operations, the pilot response was relatively small.
However, since 2021, the construction of personal pension system has been significantly accelerated. From the central level, the Ministry of Human Resources and Social Security and other departments took the lead in "standardizing the development of the third pillar of pension insurance"; from the local level, exclusive commercial pension insurance pilot projects and pension financial products pilot projects have been implemented one after another.
On April 21, 2022, the "Opinions on Promoting the Development of Personal Pensions" was implemented, and the development of personal pensions ushered in a new milestone.
More than six months later, on November 4, the Ministry of Human Resources and Social Security and five other departments jointly issued the "Implementation Measures for Personal Pensions", which include: Personal Pensions refer to a system of government policy support, individual voluntary participation, market-oriented operation, and realizing the supplementary functions of pension insurance. The implementation of the personal account system, and the payment is entirely borne by the participants. The annual payment limit is 12,000 yuan. You can purchase savings deposits, financial products, commercial pension insurance , public fund , etc. that meet the regulations, implement full accumulation, and enjoy tax preferential policies in accordance with relevant national regulations. Participants who have reached the age of receiving basic pensions, or have completely lost their ability to work, have settled abroad, and other circumstances that meet national regulations can receive personal pensions monthly, in batches or in one lump sum.
At the same time, many departments have also intensively introduced relevant supporting policies, and the individual pension system has entered the stage of substantial implementation, bringing widespread expectations to the market.
faces many challenges
At the moment when institutions are enthusiastic about participating in personal pensions, the latter also faces many challenges.
The above "Implementation Measures for Personal Pensions" clearly defines the tax deferred discount with a limit of 12,000 yuan/year. So how attractive is this tax preferential to residents setting up personal pension accounts? How to attract more residents to participate in personal pension plans and expand the scale of personal pensions?
CITIC Securities believes that for the problem of insufficient tax incentives, considering that the personal income tax of in my country is only 8.1% of the total tax revenue, you can refer to Japan and divide the deduction limit of different groups of people to appropriately expand the discount range.
In addition, in view of the current situation of the small number of individuals who pay personal income tax, CITIC Securities recommends that you can refer to the successful application of German Lister Pension and my country's New Rural Cooperative Medical Care , and provide direct subsidies to specific groups of people or the leverage effect to effectively expand the scope of participation in personal pensions.
Research head of the China Insurance and Pension Research Center of Wudaokou School of Finance, Tsinghua University Zhu Junsheng told Nanduwan Finance reporter that individual pension adopts the deferred taxation model of EET (i.e., no taxation in the payment and investment links, and taxation in the collection links), and adopts economic incentives to the individual tax paying groups. However, it should be noted that after the personal income tax threshold was adjusted in 2018, there were about 65 million people who actually paid personal income tax. Therefore, if it is a system for a few people, the market size is not as large as imagined.
"The reason why foreign EET is effective is that it has capital gains tax. Through personal pensions, you can do not have to pay capital gains tax, so it is attractive." He further analyzed that the current domestic general investment income does not have capital gains tax, and the future 3% includes investment income, which makes the tax benefit significantly discount.
Zhu Junsheng also said that the prerequisites for participating in personal pensions: participating in basic pension insurance will affect the participation of personal pensions to a certain extent.
He believes that to support personal pensions to become a system for the majority, it is necessary to adjust and optimize relevant policies in a timely manner in the future.
first, broaden the scope of participation. Compared with the first and second pillars, the third pillar personal pension has institutional attributes such as decentralization, independence, actuarial neutrality, and theoretically covers all populations. In order to broaden the coverage of personal pensions, the restrictions on participation can be lifted in a timely manner to create conditions for a large number of flexible employment personnel in the new economy and new employment form to participate in the personal pension system, so that it becomes a basic, universal and bottom-line institutional arrangement in the pension system.
"China's urban and rural pension residents insurance has some supporting facilities after paying personal fees," Zhu Junsheng said that in the future, this incentive method can also be expanded.
Second, optimize tax policies. First of all, in the absence of capital gains tax, it is recommended to clearly deduct tax exemptions for the investment income when collecting it to enhance the attractiveness of tax benefits.
The second is to increase the amount of tax benefits in a timely manner. At the same time, a dynamic adjustment mechanism is established that links the deduction amount to the index of social average wage growth. In the future, with the economic development of and the increase in income levels, the pre-tax deduction amount will be dynamically increased.
The third is to expand tax preferential methods. Previously, the pilot program of personal tax deferred commercial pension insurance and the current personal pensions adopted the deferred taxation model of EET, which has a certain incentive effect on high-income groups, but low-income groups cannot enjoy it because their income cannot reach the threshold, which is not conducive to improving the fairness and coverage of the system.
How big can the scale of personal pensions be in the future? How long does it take to grow?
Previously, when Industrial Securities calculated the entry ratio of personal pensions in my country, it referred to the process of the acceleration of the entry of the US IRA after 1990. "After 1990, the added value of the IRA market entry ratio exceeded 10% within 5 years, and the added value of the market entry ratio exceeded 20% within 10 years. Therefore, we benchmarked against IRA and made a neutral assumption: assuming that the proportion of individual pensions in my country can reach 10% within 5 years, and the proportion of individual pensions in the market entry ratio will reach 20% within 10 years."
"According to the above calculation of the scale of individual pensions, assuming that the annual participation rate increases by 2.4%, the cumulative added value of the individual pension participation rate will reach 12% within 5 years. That is, the cumulative increase in the scale of individual pensions reached 842.242 billion yuan. Assuming that the proportion of individual pension funds entering the market reaches 10%, the cumulative increase in the scale of entering the market can reach 84.224 billion yuan; assuming that the cumulative added value of the individual pension participation rate within 10 years will reach 24%, that is, the cumulative increase in the scale of individual pensions can reach 3088.221 billion yuan, assuming that the proportion of individual pension funds entering the market reaches 20%, the cumulative increase in the scale of entering the market is 617.644 billion yuan," added Industrial Securities.
Investment advisors and pensions have natural advantages
Of course, the scale of the individual pension market needs to go through a long-term process from investor education to popularization of investment behaviors. In an interview with a reporter from Wancai Society, some people believe that pensions are particularly suitable for promotion using investment advisory models, so they encourage the exploration of personal pension investment advisory business and provide professional services for residents' pension investment.Chen Li, chief economist at
, Sichuan Finance Securities, told the Wancai reporter that in recent years, China's investment advisory market has increased significantly, and the market environment of financial investment has also been developing in line with the times. As a new thing, domestic personal pension investment has a relatively large space for development in terms of market publicity and investment professionalism.
Yu Lingqu, deputy director of the Institute of Finance and Modern Industry of China (Shenzhen) Comprehensive Development Research Institute, also believes that investment advisors and pensions have natural advantages. He analyzed to the Bay Finance and Economics reporter: "We develop investment advisors to encourage long-term investment and reduce short-term operations. Personal pensions are naturally long-term funds, and they can only be withdrawn after retirement to enjoy tax incentives. It can be said that personal pensions provide investment advisors with excellent 'scenarios', and of course the development of investment advisors is also conducive to better preservation and appreciation of personal pensions."
In further broadening the source of personal pensions, CITIC Securities also believes that the United States and Japan can refer to the transfer system of the second and third pillar accounts to promote the development of personal pensions.
Zhu Junsheng also believes that investment advisory business can stimulate potential pension needs to a certain extent through professionalism and sales skills. "Consumer financial education should be paid attention to. Longevity risk management and long-term savings are two major factors that affect investment decisions, which are related to whether consumers are aware of their own longevity risks, their corresponding pension reserves, and whether investment returns over a long period of time are attractive enough."
He said that domestic residents have very little accumulation of pension assets, but they have high savings in the banking system, with a total savings rate of 44%. At the same time, 2/3 of bank savings are within one year, which is very different from the asset allocation targeted by pension. Therefore, in financial education, it is necessary to improve consumers' awareness of increasing longevity risks and the concept of long-term pension savings.
provides more choices, and make basic skills
So, with the support and promotion of policies, how should bank wealth management subsidiaries accelerate pension financial product innovation in the future and enrich personal pension investment options?
Yu Lingqu said that bank wealth management subsidiaries are derived from the banking system and have unique advantages in customer trust and providing low-risk financial management tools. In the future, financial products with longer investment periods, linked to retirement age and relatively stable returns can be developed, and comprehensive investment consulting services can be provided to provide full-life service for customer pensions.
Chen Li believes that financial subsidiaries will have more allocations in bond and equity stocks investment, but the investment capabilities and performances between companies are still different. Faced with the new challenges of personal pension investment, it is the top priority to do a good job in basic skills and strengthen the improvement of professional investment and research management.
If the entry of personal pensions into the market faster, what else can the government or sales agencies and other parties do?
Yu Lingqu said: "The government's words are to facilitate it. The previous tax-optimized pension insurance pilot was not very successful because the operation was too complicated. Institutions should strengthen investor education and explain the relevant benefits clearly."
Zhu Junsheng said that banks, bonds, securities , funds and insurance compete across industries, each with their own advantages. Banks have channel advantages and customer advantages. In terms of products, they can provide bank wealth management and pension savings to adapt to customers with different risk preferences. In terms of
fund, he believes that he has relatively advantages in investment, but from the product perspective, there are only two types of fund products currently, and they are relatively homogeneous.
"The advantage of insurance is protection, because the pre-determined interest rate of insurance is written into the contract, so it has some certainty protection, which is attractive to some customers who prefer low-risk and prefer passive income."
Zhu Junsheng further pointed out that most insurance companies may not be familiar with other pension stocks , funds and other pension financial products . In the future, customers need a comprehensive pension financial service.
edited and written by: Nanduwan Finance Society reporter Wang Yufeng Ye Linfang
