Pension “18 consecutive rise” is hardly a surprise, experts expect this year’s increase of about 3%

2022-07-25 0 By

A few days ago, local NPC and CPPCC sessions came to a close, and many provinces mentioned in their government work reports that they will raise the basic pension for retirees. Experts said that there is little doubt that the pension has been raised in 18 consecutive years.In addition, in order to alleviate the pressure of pension income and expenditure, it is imperative to accelerate the construction of multi-level and multi-pillar pension system, and it is urgent to implement the personal pension system as soon as possible.According to the reporter, in 2022, a number of provinces have made plans to moderately increase the basic pension for retirees in their government work reports. For example, Hebei province clearly plans to increase the basic pension for retirees.Henan province said it would “moderately raise basic pensions for retirees to ensure the bottom line of people’s livelihood”.Jilin and Shaanxi provinces have also made it clear to “ensure that basic pensions are paid on time and in full”.At the same time, on January 21, Liu Kun, secretary of the Party Group and minister of the Ministry of Finance, made it clear at the National Financial Work Conference that the basic pension of retirees will be moderately raised.We will launch national pooling of basic old-age insurance for enterprise employees, clarify the responsibilities of the central and local governments for expenditures, establish a long-term mechanism for local governments to replenish endowment insurance funds, appropriately adjust the surplus and shortage of funds, and ensure that pensions are paid on time and in full.Industry experts believe that the 2022 pension increase window has opened.In fact, by 2021, China’s retirees’ pension has achieved “17 consecutive increases”.From 2018 to 2020, the growth rate was 5% for three consecutive years, and the growth rate will be adjusted to 4.5% in 2021.”In recent years, the increase of the basic pension for retirees has been on a downward trend, and this year the increase is about 3 percent.”Dong Dengxin, director of the Institute of Finance and Securities at Wuhan University of Science and Technology, said in an interview with Securities Daily that, on the one hand, it is affected by factors such as the slowing growth rate of social security fund income.On the other hand, at present our country worker pension per capita level is about 3000 yuan every month, the base has been higher, accounting for the average salary proportion of post workers about 60% or so.”Retirees have the right to share in the fruits of social development, and pension increases are necessary to fight inflation.As a result, the basic pension for retirees will continue to rise this year, and the pension increase should be at least no less than the CPI increase.”IPG China chief economist Bo Wenxi told reporters.According to the report of Shanghai Securities Fund Evaluation And Research Center, the basic pension has risen for 17 consecutive years until 2021.However, according to the average salary of 8,115 yuan/month in 2020, the contribution salary will be 8,115 yuan, and the pension income will be 3,084 yuan/month from the age of 22 to the age of 60, with a replacement rate of 38%.This is still slightly below the 55% minimum pension replacement rate recommended by the International Labour Organisation.The “14th Five-Year Plan” proposed to vigorously develop inclusive pension services, gradually delay the statutory retirement age, and to improve the coverage of enterprise annuity, standardized development of the third pillar pension insurance.”At present, China is facing the impact of an aging population. As large-scale development of the first and second pillars may be limited, the implementation and rapid promotion of the relevant systems of the third pillar cannot be delayed.”Yuan Shuai, deputy secretary general of the Rural Revitalization Construction Committee of the China Cultural Management Association, told reporters.After the “14th Five-Year Plan” proposed the vision and measures to cope with the aging population, governments and regulatory authorities at all levels quickly responded and refined the relevant content.On December 17, 2021, the 23rd Meeting of Commission for Deepening Overall Reform of the CPC Central Committee deliberated and approved the Opinions on Promoting the Development of Individual Pension. The meeting stressed that developing a multi-level and multi-pillar pension system is an important measure to actively respond to the aging population and realize the sustainable development of the pension system.We should improve the system design, rationally divide the responsibilities of the state, units and individuals to provide institutional guarantee for individual pension accumulation.The document has an important guiding role in promoting and improving China’s three-pillar system, marking the “new era of personal pension” is about to open.In addition, the report on the work of the government in 2022 in many places also explicitly proposed “improving the multi-level social security system” and “building the” three-pillar “old-age insurance system”.How does the third pillar individual pension system of our country develop?It is understood that in 2018, China has piloted pension target fund and individual income tax deferred commercial pension insurance;In September 2021, CBRC launched pension financial products.At present, the variety of personal pension products is relatively single, the market choice is not large, there is still a large market space.So far, the net asset value of the pension target fund is about 100 billion yuan.The accumulated premium income of the personal income tax deferred commercial endowment insurance is only over 200 million yuan, and the number of insured people is more than 45,000. Further efforts should be made to develop the insurance.Dong dengxin said the development of the third pillar of personal pensions must be done at the same time.First of all, the development of personal pension system largely depends on the concept of family financial management. It is necessary to guide family financial management through investment education, strengthen the emphasis on pension savings, improve the emphasis on personal pension products;Second, financial institutions should be encouraged to carry out personal pension product research and development and business innovation to provide investors with more diversified investment options.According to Yuan shuai, the vigorous development of personal pension depends on the support from tax policies in terms of strength and structure, and also needs related institutions to improve product research and development capacity and capital management capacity, make more explorations, and launch more diversified and age-appropriate personal pension products to meet the diversified pension needs of the public.In terms of pension funds entering the market, Dong dengxin said that personal pensions, as the third pillar, will become an important source of long-term funds for China’s capital market.”The scale of the first pillar basic pension fund entering the market is set. From the situation of developed countries, the scale of basic pension fund has little room for growth.Pillar 3 individual pensions are not capped.When the enterprise annuity, as the second pillar, cannot rapidly expand its scope and capacity in the short term, personal pension is expected to advance and play a greater role in supplementary pension.”Dong Dengxin analysis.Yuan shuai said that with the further development of the third pillar of pension, it and the capital market will form a mutually reinforcing situation.In China’s capital market, long-term and institutionally-led investment funds are relatively scarce, and pension is expected to become one of the long-term and stable capital sources of the capital market.The development of the third pillar will not only improve China’s multi-level social security system, but also boost the development of the capital market.At the same time, the continuous improvement and development of the capital market will also feed back the construction of the third pillar, forming a virtuous cycle.(Securities Daily)