CPPCC Members: Implementation Of Occupational Pension Investment Public Fund Pilot

Wang Xian said,

Whether or not we can effectively supplement the pension treatment and protect the retirees' living standards of government departments and institutions, one of the key factors is whether occupational annuity can establish a reasonable and effective investment and operation mode.

From the property attribute, the assets in the annuity personal account belong to the insured's personal property.

The insured should have the right to make investment decisions and benefit from participating in the payment of occupational annuity.

In the absence of individual option, individual employees can not choose their own investment according to their own conditions, which not only affects personal initiative and account portability, but also leads to effective incentives and constraints on managers, and increases the level of investment income.

Wang Xian believes that the necessity of introducing individual choice in occupational pension is reflected in three aspects.

First, the introduction of individual option in occupational annuity can better meet the individual needs of employees.

Due to the difference in age, household income and total expenditure and structure and risk preference, occupational pension workers have different needs for occupational annuity investment products.

If the investment needs of different groups are ignored, the insured can not really play the role of the second pillar of occupational pension.

For example, for those close to retirement, it is not appropriate to choose relatively large investment products.

If individual options are set, retirees can choose a more robust portfolio and avoid market risks.

Second, the introduction of individual option in occupational annuity can better motivate asset managers.

If the occupational annuity is determined by the defined pension scheme, individuals can choose and adjust their investment according to their own conditions within the range of products set.

For managers, it is a good incentive mechanism. Managers with outstanding management performance can expand the scale of assets management and get higher management fees income.

Third, we can enhance the portability of occupational pension.

In today's society, employees are no longer employed in an enterprise or unit for life.

The introduction of the system of individual choice is actually a confirmation of the full rights of the insured person to the accumulated assets in his personal account.

Individuals have the right to choose, and the changing units of the insured can not only continue to enjoy the original accumulation, but also carry the original accumulation to the new units and continue to participate in the occupational annuity of the new units.

This clears up a system obstacle of re allocation of labor force, and helps to improve the efficiency of labor resource allocation in China.

From the perspective of the development of foreign annuity, the system of individual investment options is introduced to determine the payment pension scheme, and the investment public fund is the most important one.

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For example, in the US occupational pension system, the 401k plan is the main occupational pension system in the United States, and each plan offers 5-50 products for personal choice.

As of 2014, the assets of 401K invested in mutual funds amounted to US $2 trillion and 800 billion, accounting for over 60%, and the absolute annualized yield over the past 30 years was over 6%.

Public funds have been in the history of nearly twenty years in China. Public funds, as an important way of personal financial management, have been integrated into common people's homes.

The public offering fund is rich in products, which can match different groups' risk preferences and income expectations, and basically meet the investment needs of occupational pension.

In accordance with the investment fund law, China has established a comprehensive public fund supervision system, and the public funds strictly establish independent third party trusteeship, information disclosure and other mechanisms. The fund property security has a sound system guarantee, which can meet the occupational pension requirements for the safety of workers' property.

Wang Xian suggested that the Ministry of human resources and social affairs can introduce individual investment options in the formulation of occupational pension policies for public institutions, and pilot investment in public funds.

In the pilot stage, the units that participate in the pilot of individual choice right can be an organ with higher financial expertise. For the public funds offered by investment, the fund products of the public fund companies that can meet certain requirements can be selected.

After obtaining pilot experience, the scope of the trial can be extended to all occupational annuity until enterprise annuity.