"Report On The Development Of Pension Financial Responsibility (2021)" Project Launched, China Southern Fund And 21St Century Capital Research Institute Discuss The Future Of The Third Pillar

In contemporary China, "pension" is one of the core issues of people's livelihood.

With the aggravation of China's aging population, the society pays more and more attention to how to steadily increase the value of individual pension assets.

Recently, a closed door Seminar on "the development of the third pillar promotes pension finance to usher in new opportunities" jointly organized by China Southern Fund, 21st century economic report and 21st Century Capital Research Institute was held in Beijing.

More than ten senior experts from the Chinese Academy of Social Sciences, China Southern Fund, Zhongrong trust, Taikang assets, COSCO pension and other financial institutions gathered together to conduct in-depth discussions on the policy path, product development and market development of the third pillar of pension.

As a representative of the organizer, Chen Chenxing, executive editor of the 21st century economic report, said that the combination of Finance and pension business, exploring the innovation path of pension finance, and developing pension financial products with guaranteed income will surely make greater contributions to winning the battle of supporting the elderly and resolving the worries of the people for the aged.

Yu Wenhong, deputy general manager of China Southern Fund, said in his speech that the development of the third pillar is not only to improve the pension financial system to meet the needs of the aging population, but also to provide long-term stable funds for the capital market, which is an important measure to promote the healthy development of the capital market and realize the long-term maintenance and appreciation of pension assets.

At the seminar, China Southern Fund and the 21st Century Capital Research Institute announced the formal launch of the research on the development report of pension financial responsibility (2021).

It's time to develop the third pillar

"The outline of the 14th five year plan points out that" we should improve the endowment insurance system and promote the long-term balance of the basic endowment insurance fund. ". This is the first time that China has proposed the construction of pension system, and it is an important improvement. " Zheng Bingwen, director of the world social security research center of the Chinese Academy of Social Sciences, said in the keynote sharing.

The background of the policy is related to the acceleration of China's entry into an aging society.

According to the seventh national census bulletin, by 2020, the total number of elderly people aged 60 or above in the mainland will be 264 million, accounting for 18.7% of the total population.

According to relevant forecasts, this proportion will reach 25% in 2035 and 50% in 2050.

On the one hand, the social population structure is aging and has fewer children. On the other hand, China's current pension system is extremely imperfect.

Compared with the major OECD countries, the proportion of China's pension scale to GDP is still at a low level.

According to statistics, by the end of 2020, China's pension scale totaled 9.3 trillion, accounting for 9.2% of GDP. This figure is far behind the average of 67% (in 2019) of OECD countries.

According to the forecast, there will be a pension gap of 8-10 trillion yuan in China in the next 5-10 years, and this gap will further expand over time.

At the seminar, Zhong rongsa, former vice president of China Securities and fund industry association, said in the keynote sharing that at present, the pension of residents mainly relies on basic pension, and most people lack of supplementary pension planning. The second and third pillars of the pension system, especially the design of the third pillar of the pension system, highlight the "individual" pension responsibility and pension willingness, which is a beneficial supplement to the traditional public pension system. At present, China's pension system is facing imbalance and inadequate contradictions. In this situation, it is urgent to develop the third pillar of pension and improve the multi-level pension system.

This view has also been unanimously agreed by experts: it is the right time to build the third pillar system of pension.

Yu Wenhong said that throughout the international experience, all countries are committed to building a relatively balanced pension system with multi pillar structure. The troika can keep pace with each other and complement each other. It is imperative to vigorously develop the third pillar.

According to the 21st Century Capital Research Institute, since October 2019, the central government and various departments have intensively issued policy documents on multi-level, multi pillar and third pillar.

For example, in December 2020, the central economic work conference for the first time proposed to "standardize the development of the third pillar of pension insurance".

This point was once again reiterated in the 2021 government work report and the 14th five year plan for national economic and social development of the people's Republic of China and the outline of long-term goals for 2035, which were released in the second quarter of this year.

In this regard, Zheng Bingwen believes that at present, China has entered a historical period in which the most attention has been paid to multi-level, multi pillar and third pillar, which is also "the best period for the construction and development of the third pillar pension".

According to Chen Chenxing, the 21st Century Capital Research Institute has been tracking the development of pension financial business for a long time, started the research on the third pillar of pension in 2018, and released the white paper of the first year of the development of China's third pillar of pension and the white book report of the first year of the third pillar development of China's pension in 2018. The report has been widely supported by regulators and market institutions. Among them, "the white paper sub report of the first year of the third pillar development of China's pension in 2018" is the research result of the strategic cooperation between the 21st Century Capital Research Institute and China Southern Fund.

The 21st Century Institute of capital studies believes that, on the one hand, think tank research can promote policy level discussion and design to form effective forward-looking research results; On the other hand, financial institutions should be encouraged to strengthen their ability to design financial products and allocate assets; In addition, all kinds of market entities should form a joint force in the investment and education business, accelerate the promotion of market cognition, and realize the effective cultivation and transformation of investors.

Finance, taxation and account system are the top priority

The new era calls for a new system. At the seminar, experts discussed the system design and path selection of the third pillar pension system in China.

In December 2008, the State Council issued the "several opinions of the State Council on the current financial promotion of economic development", which put forward "Research on giving tax incentives such as deferred tax payment to endowment insurance policy holders".

After ten years of efforts, in May 2018, the individual tax deferred pension insurance was finally piloted in China.

According to Zheng Bingwen, "individual tax deferred pension insurance" is still the "1.0 version" of the third pillar system. There are some defects in the system design of this version.

"The fiscal and taxation policies of the third pillar system need to be matched." Zheng Bingwen pointed out that the third pillar of "version 2.0", the carrier of tax preferential policy, is the third pillar personal account, not a certain product or industry.

"The third pillar pension account needs to be 'unique', with only one account per person, covering all product lines in different financial industries." Zheng Bingwen said.

In this regard, Zhong rongsa also believes that the tax extension policy should not be given to a certain product, but should be implemented in the personal account, so it is very important to establish an open personal pension account.

"In the account, the holder can freely choose the products provided by the insurance industry, the fund industry and the banking industry." Zhong rongsa said.

The development mode of "account system" has been widely recognized by experts attending the meeting. Yu Wenhong also pointed out that the account system is the inevitable choice of the individual pension system. Only by adhering to the account system model can the preferential tax policies really benefit the public.

"The tax premium account is an important dynamic carrier for us to implement the personal pension system, invest in related pension products, enjoy preferential tax policies, and realize tax deduction, involving the whole life cycle management process." Yu Wenhong said.

The top-level design of fiscal and taxation system is not only related to the establishment of individual pension account system, but also has a great impact on the asset management institutions involved in pension finance.

Yu Wenhong pointed out that the core of the third pillar of pension is "tax preference".

"Tax preferential policies should not only give consideration to fairness, but also ensure the efficiency of tax paying and non tax paying groups, so as to promote the construction of the third pillar of pension; Regional differences should be taken into account. The intensity of tax preference should not only make the regions with advanced development have the enthusiasm to participate, but also enable the backward areas to enjoy the practical benefits brought by tax advantages, so as to ensure the effectiveness of the policy. " Yu Wenhong said.

At the seminar, some experts at the meeting said when talking about the "fiscal and taxation" system, China's wealth management still lacks the "soil" for tax planning. Wang Qiang, chief compliance officer of Zhongrong trust, said that at present, the public fund and insurance industry have overall tax pilot and corresponding tax relief policies, but the fiscal and tax policies of trust and other asset management products still need to be followed up.

"For asset management products, the current tax policy is relatively friendly as a whole. However, the system matching the new asset management regulations has not yet been fully established in the industry. Tax policy is the key to promote the trust industry to deeply participate in the third pillar pension Wang Qiang said.

Public offering leads the construction of the third pillar

In Europe and the United States, which have established a relatively complete third pillar system, the asset types and structure of pension finance are quite different.

In France, Germany, Japan and South Korea, the proportion of insurance pension assets is much higher than that of public funds. In the United States, the third pillar of pension in the world, the proportion of fund assets is far ahead.

Data show that nearly half of the assets of IRAS in the United States are invested in mutual funds, with a high degree of market entry. By the end of 2020, more than 50% of investors in non monetary public funds in the United States come from pension accounts.

Zhong rongsa pointed out that China's public funds should play a greater role in the construction of the third pillar of pension with reference to the development experience of global pension financial business.

"For residents, the allocation of pension funds can cultivate long-term investment behavior, share the growth dividend of national economic growth and listed companies, and better realize the maintenance and appreciation of wealth. For public funds, actively participating in the construction of the third pillar of pension can help companies obtain "long-term money", reduce the capital disturbance faced by investment decision-making, and create more income. From the macro level, public funds are actively involved in the third pillar of pension, which is expected to guide long-term funds into China's capital market and support China's real economy. " Zhong rongsa said.

Zheng Bingwen also believes that in addition to supporting fiscal and tax policies, another important improvement of the third pillar of "version 2.0" over that of "version 1.0" is the expansion of the coverage of asset allocation to public funds and bank financial products.

"We should replace the old-age insurance management with wealth management. The first pillar is mandatory, the second pillar is autonomous, and the third pillar is voluntary, which is a kind of family wealth." Zheng Bingwen said.

China's public funds have participated in the construction of the third pillar of pension for many years. Since September 2018, domestic pension target funds have been established.

Since its launch two years ago, fof has been running smoothly. By the end of May this year, a total of 113 pension fof funds had been established in the market, with a scale of over 70 billion and a total number of clients of more than 2 million, almost all of which were individual investors. The average rate of return of 76 pension fofs operating for more than one year is 22%.

Zhong rongsa believes that under the account system, standardized public offering fund products have the advantages of openness, transparency and diversification, and will play an important role in the third pillar system of China's pension in the future.

"The characteristics of pension target fund products are that they do not focus on scale but on the number of households." it is hoped that in the future, more individual investors in China will bring such fund products into the scope of Pension Asset allocation. " Zhong rongsa appealed.

Yu Wenhong also suggested that at present, the public fund industry needs to create a product system suitable for the investment of the third pillar fund to carry the huge allocation demand of long-term pension funds. If we can combine the advantages of public funds in terms of products with the third pillar, individual investors will have more choices of investment tools.

As one of the few fund companies with a "full license" for pension investment management in the industry, China Southern Fund has been engaged in the field of pension for more than 18 years since it was first selected as the investment manager of social security fund in 2002. It has deepened resource investment in investment and research, operation and service, and formed social security, basic pension, enterprise annuity, and so on A complete Pension Asset management system, including occupational pension and public pension products, has managed more than 350 billion yuan of pension assets. Social security business has repeatedly won A-level assessment and "three-year and five-year contribution social security Award" and other awards. The number of enterprise annuity clients is more than 150, covering financial, energy, communication, tobacco, aviation and other industries. It provides services for occupational annuity in all provinces and cities in China, and establishes business cooperation relationship with all trustees.

In terms of pension fund issuance, China Southern Fund has been in the forefront of the market.

In 2018, China Southern Fund issued the southern pension target date of 2035, which is the first batch of pension target funds approved and established in the whole market. At present, China Southern Fund has a complete layout of pension target funds, and has become one of the fund companies with the largest number of pension target funds in the industry, including 4 products with target date (2030, 2035, 2040, 2045) and target risk (Fuyuan stable).

Wu zengtao, chief marketing officer of China Southern Fund, also said that when issuing pension target funds, China Southern fund not only fully drew on the product experience of European and American advanced countries, but also formulated practical product rules according to the management mechanism of China's public offering industry and the characteristics of investors, so as to help investors truly realize the value maintenance and appreciation of pension assets.

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