Personal pension is coming! This is not only an arrangement to consolidate the pension reserves of residents, but also closely related to the capital market.
On April 21, the General Office of the State Council issued the Opinions on Promoting the Development of Individual Pensions (Guo Ban Fa [2022] No. 7) (hereinafter referred to as the Opinions). It clarifies the scope of participation in individual pensions, institutional models, contribution levels, investment and collection.
Industry insiders pointed out that this is the first top-level design document of China's personal pension system, which marks the end of the pilot project of the mainland's personal pension system and officially enters the stage of comprehensive development.
What is a personal pension?
Individual pension is the third pillar of the mainland pension insurance system.
At present, the first pillar of the mainland's endowment insurance system is basic endowment insurance, and the employee endowment insurance plus the urban and rural residents' endowment insurance has covered more than 1 billion people. The second pillar is the enterprise annuity and occupational annuity, which has covered more than 58 million people.
As the third pillar of the personal pension system, it has not been introduced before, which is a short board, and now this short board has finally been completed.
Some people think that after the introduction of personal pensions, the current pension insurance has been replaced, and the future pension will depend on itself, which is actually a misunderstanding.
Who can participate?
The opinions show that workers who participate in the basic old-age insurance for urban workers or the basic old-age insurance for urban and rural residents in China can participate in the individual pension system.
Moreover, the individual pension implements a personal account system, and the contribution is completely borne by the individual participant and fully accumulated.
Participants establish personal pension accounts through the personal pension information management service platform (hereinafter referred to as the information platform).
This is the so-called personal account, unified platform.
How much do I pay?
The opinions are clear that the individual pension implements a personal account system, and the contribution is completely borne by the individual participants, and the full accumulation is implemented.
Participants establish personal pension accounts through the personal pension information management service platform. The upper limit of the annual contribution of the individual pension to the participant is 12,000 yuan.
The personal pension is completely individual contribution, which is different from participating in the employee pension insurance in the unit, and paying the employee pension insurance in the unit is the joint payment of the unit and the employee.
How to invest?
The funds in the personal pension fund account are used to purchase financial products that meet the needs of different investors that meet the needs of different investors, such as bank wealth management, savings deposits, commercial endowment insurance, and public funds, which are safe, mature and stable, subject to standardization, and focus on long-term preservation.
The financial institutions and financial products involved in the operation of individual pensions are determined by the relevant financial regulatory departments and released to the public through the information platform and the financial industry platform.
According to the 2018 research report of China Merchants Securities, the final investment in various types of stocks in the US personal pension system accounted for a total of 60% (2017 data).
Where to buy it?
The Opinions point out that participants can purchase financial products from financial institutions that meet the requirements or their sales channels entrusted by law and compliance (hereinafter collectively referred to as financial product sales institutions) with the personal pension they pay, and bear the corresponding risks.
Moreover, the participant shall designate or open a personal pension fund account for personal pension contributions, aggregating income, payment and payment of personal income tax.
How do I claim it?
According to the opinions, participants who have reached the age of receiving the basic pension, have completely lost the ability to work, go abroad (abroad) to settle down, or have other circumstances that meet the provisions of the state, may receive a personal pension on a monthly, divided or one-time basis after the information platform verifies the conditions for receiving it, and the method of payment cannot be changed once it is determined.
When receiving it, the personal pension should be transferred from the personal pension fund account to the bank account of the social security card.
Upon the death of a participant, the assets in his or her personal pension fund account may be inherited.
What's the difference with bank deposits?
After the release of the opinions, many netizens asked questions, what is the difference between personal pensions and my own bank deposits?
Zhang Yinghua, executive researcher of the World Social Security Research Center of the Chinese Academy of Social Sciences, said that there is a big difference between personal pensions and personal deposits:
First, the personal pension has a personal income tax concession within a certain amount;
Second, the investment products that dock with personal pensions are selected qualified products, taking into account safety and profitability;
Third, the personal pension adopts closed account management, which is generally not allowed to be withdrawn in advance, which is an asset management means to "turn short into long".
According to the opinions, the state formulates preferential tax policies to encourage qualified personnel to participate in the personal pension system and receive personal pensions in accordance with regulations.
Is it the domestic version of the 401(k)?
Zhang Yinghua explained that the 401 (k) in the United States is actually an enterprise annuity, which requires units and individuals to jointly contribute, while the personal pension is completely individual contribution, similar to the IRA (personal retirement account).
What does it mean for individuals to provide for the elderly?
CEIBS fund believes that the individual pension system actively reserves pension assets through the leverage of tax incentives and exerts everyone's subjective initiative.
From the perspective of positioning, it is different from the first pillar of ensuring the basic food and clothing of the people and the second pillar of relying on employers for old-age security, which is mainly positioned in the personal supplementary old-age pension, that is, the investor's voluntary pension reserves and pension investment in order to improve the living standards after retirement and realize the "good life" after retirement.
From the perspective of importance, with the deepening of the aging degree of the mainland, the mainland urgently needs to "reduce the burden" of the first and second pillars of the mainland through personal pensions, so as to achieve the healthy and sustainable development of the old-age security system.
How big is the market?
Wang Hanfeng, chief strategist and managing director of CICC, pointed out that according to the data of the Ministry of Human Resources and Social Security and the National Bureau of Statistics, as of 2020, the number of people participating in the urban basic pension insurance and the urban and rural residents' pension insurance will be 450 million and 540 million, respectively, indicating that the population base that can participate in the personal pension system is wider. At the same time, based on the current regulations, the upper limit of participants' annual payment of personal pension is 12,000 yuan, which means that from a long-term point of view, the scale of personal pension account funds is expected to exceed one trillion yuan. On the other hand, it is also expected to bring new types of long-term investors to the capital market.
What are the benefits?
Zhang Yinghua believes that personal pensions help to promote the construction of a multi-level and multi-pillar pension insurance system, which can enrich everyone's pension choices, and also have certain benefits to the capital market, one is to increase the supply of long-term funds, and the other is conducive to the long-term nature of investment.
According to industry analysts, because personal pensions are mainly oriented to investment needs with relatively low risk appetite, the pursuit of long-term absolute returns has higher requirements for safety and robustness. The vigorous development of personal pensions is expected to drive long-term incremental capital allocation to relatively stable products.
When can I buy it?
According to the opinions, the Ministry of Human Resources and Social Security and the Ministry of Finance should strengthen guidance and coordination, implement it step by step in combination with actual conditions, and select some cities to try it for 1 year first, and then gradually push it forward.
Zhang Yinghua said that the pilot cycle of one year, should closely follow the pilot, timely publish the qualified personal pension product catalog, qualified institutional conditions, etc., while doing a good job of public publicity, improve the awareness of personal pension.
Will it bring a bull market?
From overseas experience, such arrangements may serve as long-term funds and become the cornerstone of the bull market.
According to the 2018 research report of China Merchants Securities, the original intention of the "401K" plan launched by the United States in 1978 was to encourage the United States to increase pension savings, but the rapid growth of pension assets directly became a powerful driver of the 22-year bull market in the United States from 1978 to 2000.
It is estimated that in the 20 years after the implementation of the 401k plan in the early 1980s, nearly $600 billion of incremental funds were contributed to the stock market, and by the end of 2017, a total of $1.6 trillion in new funds were contributed.
Expert Voice:
The annual introduction of incremental funds can reach 781.4 billion yuan
Zheng Jiawei, chief of Shanghai Securities Fixed Income: The implementation of the individual pension system will help improve the mainland pension security system, and the basic pension insurance, enterprise annuity and occupational annuity will form the "three pillars"; in addition, the current aging phenomenon in the mainland is serious, the pension gap is large, and the implementation of the personal pension system will help to make up for the lack of pension funds.
GF Fund Yang Zhe: Statistics show that after the individual tax reform in 2018, the number of individual tax payers in the mainland was about 65.12 million, and in extreme cases, assuming that everyone participates in the personal pension system, it can bring 781.44 billion yuan of incremental funds to the market every year. If 30% of those who participate in the individual tax payment participate in the personal pension system, it will also bring about 234.4 billion yuan of incremental funds to the market every year.
Wei Wei, assistant director of Ping An Securities Research Institute and chief strategist, pointed out that according to the requirements of the Opinions, more than 1 billion residents on the mainland are eligible to open accounts, and their enthusiasm for participation is expected to be guaranteed in the future under the incentive of preferential tax incentives.
Guotai Junan Non-Bank team expects that under the influence of the preferential tax policy, people who expect to have a monthly income of more than 10,000 yuan (5,000 yuan tax exemption + about 4,000 yuan special deduction) are willing to reduce the tax base by participating in the personal pension policy. Assuming that the number of people with a monthly income of more than 10,000 yuan in the country is 20 million people, of which 50% are willing to participate in personal pensions, it will bring about an annual increase of 120 billion yuan in the asset management industry.
Non-bank team of Everbright Securities: With the further improvement of the detailed rules of the individual pension policy, the qualification of individual account management may become the focus of attention of financial institutions. From the perspective of the development law of overseas mature markets, tax preferences + personal accounts are the system design commonly adopted in the development of the third pillar, and the preferential tax policy helps to boost the willingness of consumers to insure personal pension insurance, and the follow-up tax preferential policies for personal pensions will be introduced as soon as possible to stimulate the demand for payment. Professional pension asset management institutions represented by the national pension have the qualifications and experience advantages of personal account management, and are expected to seize opportunities in the personal pension market and open up new space for business growth.
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