Source: NetEase Finance Think Tank
The 2024 NetEase Economists Annual Meeting, co-sponsored by the China Enterprise Reform and Development Research Association, NetEase Finance, and NetEase Finance Think Tank, was held in Beijing in November. The following is a summary of Ms. Yang Yansui, professor of the School of Public Policy and Management, Tsinghua University, professor of the Institute of Hospital Management, and chief expert of the Employment and Social Security Center:
Body:
In 1963, China ushered in the largest baby boom in history, with 29.2 million newborns, the highest number of births in the world. In 1983, this group of people was 20 years old, catching up with the mainland's one-child policy. As a result, the main feature of China's silver economy is the rapid aging of the population and the declining birthrate.
In 2023, this group of people will be 60 years old, ushering in the peak of male retirement. And that's not even the hardest time.
In 2033, this group of people will be 70 years old, and at that time, the demand for elderly care services, such as geriatric delirium and Alzheimer's disease, will increase.
Therefore, 2033 will begin to enter the most difficult period - it will be difficult for the elderly, and it will be difficult for the young. 1 patient may disrupt a family's life.
There are still 10 years to go until 2033, and we must prepare in advance to build a care system consisting of "family beds (care), community dementia service stations (rehabilitation), community hospitals (treatment) and central hospitals (research)".
Pensions may not outperform inflation
China has to face the problems of aging before getting rich, rapid aging, and deep aging.
Starting this year, the dependency ratio of the social pension scheme is expected to be less than 2.5:1, with an average of less than 2.5 people contributing to support one pensioner. This is the national average, which varies from place to place.
In the past ten years, the pensions of mainland retirees have continued to rise, starting to increase significantly, gradually decreasing, and may even be lower than inflation, which means that pensions may depreciate, can the elderly accept it?
In an aging society, the young, older and older populations are all stakeholders who are actively responding to the challenges of population aging. Compromise is required here for all. Young people should be encouraged to have children. Older people should increase their employment, do more and receive less. The elderly should be financially independent and allocate pension assets, improve their ability to cope with pension risks, live a long and healthy life, and do not over-treat.
How is the legal pension age generated? It is automatically rolled out by big data. Referring to countries comparable to the economic and social development of the mainland, how many years of life are left on pension. Use our country's average expected life expectancy - expected life expectancy = legal age to receive a pension.
If the average life expectancy of the people is 80 years old and the expected life expectancy of the pension is 15 years, the legal pension age is 80-15 = 65 (years).
At this time, the government only needs to do one thing, formulate a specific policy of early reduction and late increase. How much is the deduction received one year earlier, and how much is the increase received one year later, for the specific regulations, the policies of various countries are different. Some countries stipulate that a 5% pension is deducted from the pension one year earlier, which means that if a person receives a pension five years earlier, he can only receive 75% of the pension every year after reaching the legal age.
The government also needs to set up an Excel function tool that allows everyone to enter the figures for their own decision-making, that is, to see the results of pension calculations, i.e., actuarial balance. It is up to you to decide the most suitable time and age for receiving the basic pension.
Modern public policies need to be flexible and give some decision-making power to the parties and beneficiaries in order to promote reform and innovation.
Older persons should be paid to take care of the elderly
How can older people and retirees do something in their old age, and what is the value of engaging in elderly care services?
After the 90s of the 20th century, the governments of Western countries launched the "home care" service. To this end, the German government has launched the "50+ Action Plan", which kills two birds with one stone. With the increasing number of automated production and artificial intelligence operations in enterprises, it is becoming more and more difficult for employees over the age of 50 to be competent. The number of disabled and dementia elderly people in society is gradually increasing, and the government encourages "employees over 50 years old to go home to take care of the elderly, and the government pays salaries".
Specifically, if you take care of one elderly person, the government will pay you 30% of your original salary, and for each additional elderly person, your salary will be increased by 10%. 10 elderly people is the upper limit, and any more cannot guarantee the quality of care services. Based on this calculation, a person ends up earning 120% of their original salary.
They open home care beds and charge a fee, hire a half-day assistant, and become the superintendent themselves. This is equivalent to 1.5 people taking care of 10 elderly people. The community provides nutritious lunches and dinners, bed linen can be washed, and all they need to do is to help the elderly take medicine, bathe, breakfast, etc. There are also social workers to chat. With this model, Germany has produced a large number of small nursing homes and directors. At the same time, the socialized management of family care is promoted, and the social value of family members caring for the elderly is recognized, which is a social progress.
In the future, as the elderly population increases, caring for the elderly will become the mainstream of the service industry, and its proportion in the labor market will gradually increase. Both in-home care and family care need to be regulated, with long-term care insurance and in-home payments to address their wages and social security issues. In this way, the employment model has changed from institutional employment, to flexible employment under the platform, and then to family employment, which is the new normal of the silver economy.
From this point of view, there is a shift in demand for services in China, and there is a problem of structural unemployment, not a total problem. Therefore, the government has to do forecasting, planning, guidance and budget support.
It is a trend to make personal pensions bigger
The average life expectancy of the people has increased, and public services have been relatively reduced. As personal risk increases, so does the responsibility of individuals to manage risk. The wage replacement rate of government pensions has declined, and can we still provide for the elderly? It can meet the needs of food, but it is difficult to meet the needs of long-lived pensions.
After the 90s of the 20th century, the pension system of all countries in the world is generally composed of three pillars, strengthening government responsibility, increasing corporate responsibility and personal responsibility. The mainland is no exception. The law of the reform of the pension system matching the aging of the population is as follows:
To enter an aging society, it is necessary to consolidate the responsibility of the government and improve the basic pension system. The ratio of the working population to the retired population is generally 10:1, and the working population here refers to people between the ages of 15 and 64, some of whom are in school. The public pension scheme consists of 7 contributors and 1 pension. It can achieve full coverage and basic protection.
Entering a moderately ageing society requires restructuring of institutions and increasing the responsibilities of employers and the market. There are fewer young people and more old people. The level of public pension payments has declined. Countries promote employer pensions, namely enterprise annuities and occupational pensions, also known as the second pillar. Let employees have a second pension.
Entering a highly ageing society requires institutional innovation and increased individual and market responsibility. Particular attention is paid to the development of the personal pension system.
In 2000, when China entered an aging society, it established a social pension insurance system, in 2004 it established an enterprise annuity system, and since 2005, it has gradually established a resident pension insurance system with government subsidies as the mainstay, supplemented by residents' contributions, and more than 1 billion people have participated in pension insurance. In 2021, when the population enters a moderate aging population, a personal account pension system will be introduced. Keeping pace with the times to complete the three plans of the national pension, there is still a problem of "one pillar is big" in the basic pension, that is, the proportion of basic pension insurance is too large, and the development of enterprise annuity is insufficient.
The first pillar basic pension insurance rate is too high, accounting for 28% of the total salary (currently reduced to 24%), and the enterprise rate has been reduced from 20% to 16% of the employee's salary. This is the second highest rate in the whole world, only Italy is higher than ours.
Why should such a high rate be set? The "old people" who have retired from state-owned enterprises and the "middle-aged people" who have retired after the reform of the pension system have not accumulated contributions. Their decades of service for the country should be recognized, creating an empty liability that needs to be repaid by contributions under the new system. Therefore, this is the debt of the state-owned enterprises. Since 1997, the insurance rates of private enterprises and micro, small and medium-sized enterprises have been the same as those of state-owned enterprises, and the insurance rates of self-employed and self-employed people have been the same as those of state-owned enterprises, and everyone has repaid the debts of state-owned enterprises for 25 years. Therefore, private enterprises cannot afford to do enterprise annuities, and self-employed people choose to participate in resident pension insurance. The basic endowment insurance and enterprise annuity almost revolve around some employees of state-owned enterprises, banks, and government agencies and institutions, and there are "traces" of primary industrialization, as well as the "rigidity" of supporting measures for the reform of state-owned enterprises. I hope that the new personal pension will not repeat the mistakes of the past.
In the future, the development of private enterprises will be more difficult, and flexible employment and family employment will be the majority. How to develop the three-pillar pension system needs to adapt to the new normal in concept and innovate in policy. Summarizing the experience of global pension system reform since the 90s of the 20th century, we can find the characteristics of "overcoming rigidity with softness". For China, it is necessary to overcome the rigidity of the basic pension insurance system and treat different types of employers differently. First, the unified individual rate remains unchanged at 8%, no matter what unit you work in, the responsibility of individual payment remains unchanged, the policy of linking payment and treatment remains unchanged, and the principle of paying more and getting more is adhered to; second, the rate of non-public sector is moderately reduced, including private enterprises, social organizations, etc.; the rate of self-employed people is appropriately reduced to the part of the social pool; and third, the management function of pension accounts is strengthened according to law. The enterprise annuity contribution function of non-state-owned enterprises and small and micro enterprise employers will be included in the personal pension account, and a special employer annuity contribution account will be opened to increase flexibility and selectivity. A small renovation company has a project that allows them to make a lump sum contribution to the employer's contribution account for the personal pension account of their key personnel before income tax. To this end, it is necessary to standardize the social service functions of commercial banks in accordance with the law, strengthen the accounting and management functions of their personal assets, and commercial banks will also increase their income in social services.
Ageing in place requires community services and home-based employment
Ageing in place is a basic need. Chinese and Westerners are the same, the older people are, the more they like to have a home. Unlike the three generations of the past, the modern family can realize the full function of family pension. The necessary condition for home-based elderly care is the development of the community for the elderly.
There are two forms of retirement communities. One is the old community renovated by the government, such as installing elevators, embedded medical care, meal delivery services, etc., to support home-based elderly care, and the other is a senior care community run by commercial institutions, where the elderly have their own houses and living facilities, and the community provides continuous care services (CCRC).
There are two stages of old-age care, one is that the elderly are "supported by medical care", "raised" to live at home and participate in community activities, and "medicine" includes first aid and common and chronic disease management provided by family doctors. The other is that the elderly are "supported by medical care", and the demand for disability and dementia care has entered a period of rigid demand, and "medical care" is particularly important. For example, an older person with delirium needs full-time care.
In recent years, the disability and dementia care industry has developed very rapidly, and it is already possible to distinguish between disability care areas and dementia care areas. However, there are ground rents, rents, and full-time service fees that most families cannot afford.
Whether you have money or not, you need to provide for the elderly. The decision of the Party Central Committee and the deployment of the State Council are to divide pension services into three categories, namely, bottom-up/public goods, inclusive/quasi-public goods, and personalized/private products.
Personalized pension refers to the establishment of pension communities and care institutions by commercial institutions, and the use of market mechanisms to provide services for high-income population, leading the development of China's pension service industry.
The bottom-up service is aimed at the elderly, and the poor should also have old-age services. The financial budget holds nursing homes, 300 yuan to 500 yuan per person per month, there is a simple infirmary, and the elderly need to be qualified to check in, and the elderly bask in the sun after eating every day, and they are also full of red light, and they play chess and poker together.
First, the government subsidizes the establishment of care institutions, and second, the government guides the organization of family hospital beds, family medical record management, long-term care insurance and other new things will drive family employment. The management of family bed nurses should be standardized, including child care, home care services for nurses, and home services for rehabilitation physicians, all of which should have professional qualifications, vocational training, and receive remuneration. Society should recognize the social value of family care, formulate norms for the management of family beds and medical records, and standardize family employment. It is necessary to vigorously develop artificial intelligence for health management and support the development of family hospital beds and medical records. For example, by installing a device on the bed, the general signs such as blood oxygen saturation, body temperature, and heartbeat of the elderly can be remotely detected, and the records can be stored in the background. Drawing on the experience of Germany and Japan, long-term care insurance mainly supports family care, meeting more than 70% of the needs. The third is to support the innovation of the pension model. In the face of growing old before getting rich, rapid aging, and declining birthrate, it is not enough to learn from foreign experience, and it is necessary to support the masses to innovate, such as piling up for the elderly, and providing for the elderly in large homes.
The connotation of "raising children and preventing old age" has changed
A decent pension must be self-reliant for life.
The culture of raising children and preventing old age will not change, but the connotation has changed. It is unlikely that the child can only take care of you and let him take care of you comprehensively. Therefore, everyone must work hard to manage their health so that they can live a long and healthy life that is financially independent and healthy. Comprehensive financial and retirement planning, including health management plans, is required.
So at what age is it more appropriate to consider retirement?
Some time ago, some experts said that "it is too late to consider pension at the age of 35". In fact, the social security paid by workers participating in the work is equivalent to preparing for the elderly, so it is not too late. When do I need to buy business insurance?
Milton Friedman, winner of the 1976 Nobel Prize in Economics, argues that people's desires are endless, and that when the original is satisfied, the new is created. Based on this judgment, later generations put forward the financial life cycle theory. At the beginning of work, everyone was in debt, with low income and had to buy a house and raise children. After that, the income will increase, the children will grow up, have their own real estate, and the financial balance will gradually increase, and there will be a "turning point of wealth freedom". After that, people think about buying health and pension-related insurance and services.
Therefore, I recommend "buying a house first, buying a house early, saving for a pension later and saving for more pensions" to maximize the utility of income. Finally, according to the individual's health and financial situation, choose the right way to provide for the elderly.
Population ageing is social progress
To sum up, population aging is not social aging, but social progress. Big data shows that with the aging of the population, per capita GDP, health spending, artificial intelligence and population life expectancy are positively correlated, which represents the new normal of economic and social development now and in the future. However, declining total fertility is a challenge that needs to be actively addressed.
We need to understand the new normal of the silver economy, formulate a development strategy for 50 years of black hair + 50 years of white hair, seize the opportunity and overcome the crisis. The silver economy refers to overcoming constraints through institutional and mechanism innovation in accordance with the consumption needs of the people's health and longevity, so as to achieve a balance between supply and demand in production, distribution, circulation and consumption, intergenerational harmony, and take the road of common prosperity.