Everyone will eventually grow old, and the elderly should be prepared for the rain. Pension is to provide living materials or living funds for the elderly. The Law on the Protection of the Rights and Interests of the Elderly stipulates: "The elderly refer to citizens over the age of 60. "In real life, it is not that people need to be raised when they are over sixty, nor do they need to be raised when they are less than sixty. Instead, when people cannot obtain the means of subsistence through labor and work, they need to be supported. China has become the only country in the world with an elderly population of more than 200 million. General Secretary Xi Jinping pointed out: "Effectively responding to the aging of China's population is related to the overall development of the country and the well-being of hundreds of millions of people. Jin Li, a member of the National Committee of the Chinese People's Political Consultative Conference and deputy director of the Department of Economics and Management of Peking University, put forward an operable proposal on the issue of old-age care at this year's National Committee of the Chinese People's Political Consultative Conference. A reporter from peking university newspaper conducted an exclusive interview with Jin Li on issues related to the proposal.
Jin Li was at this year's National Committee of the Chinese People's Political Consultative Conference
The old-age model of "raising children and preventing the elderly" has encountered serious challenges
Chinese the traditional concept of old-age care condensed into an idiom - raising children and preventing old age. The moral concept, social system and economic operation of the elderly all revolve around this concept. Today, this concept faces unprecedented challenges.
Where does the challenge come from? Professor Jin Li believes that this challenge first comes from the strong contradiction between aging and low birthrate. "With the economic development of our country, the improvement of people's quality of life, and the rapid improvement of health level, the average life expectancy in our country has increased rapidly." During the 14th Five-Year Plan period, China's average life expectancy will increase by about one year. But at the same time, this has brought about the problem of longer periods of old age for Chinese people. "At the same time, our country is also facing a grim situation of low birthrate." On the one hand, it is because of the implementation of the family planning policy in the past few decades, but on the other hand, even if the policy is gradually liberalized, the willingness of young people to have children has dropped greatly, especially in first-tier cities. There are many reasons behind this, including economic aspects, social concepts and so on. Many young people feel that the cost of childbearing and parenting is very high, and young people in first-tier cities feel that the cost of housing and education is too high. For various reasons, they are more stressed. "The superposition of aging and low birthrate brings about changes in the family structure, forming a family structure of four grandparents, two fathers, and one child, and such a family structure is unbearable for children, both economically and in terms of time and energy." Under the 421 structure, it is difficult for a child to face the pension problem of four grandparents and grandmothers. Therefore, Professor Jin Li believes: "The superposition of aging and the lack of birthrates, from the perspective of population, makes China's pension problem a very serious problem that is becoming more and more prominent." ”
Another challenge is that rapid urbanization and industrialization have disintegrated the old-age function in the previous local social structure. "Local society is a relatively stable structure, and it is easy to form a pension system based on blood and geographical relations. Like raising children and preventing old age, even if it is not in a small family, it may be in a large family, or a clan in a broader sense. Like Jiangsu and Zhejiang, there are many clans, ancestral halls, clan ancestral property, if there are children orphaned, they are raised by the clan. If the elderly have no source of livelihood, they are also supported by clans. So it is a traditional way of providing for the elderly that combines blood and geography. But today, in the era of large population mobility, rural people go to the city to work, and college students graduate to a new city to find employment. This has led to a large number of rural people, even many urban people, whose children are not around. ”
Based on such a social environment, the way of raising children and preventing the elderly has become extremely unrealistic for many families, and socialized old-age care has become the trend of the times. Professor Jin Li focused on the issue of socialized old-age care from the financial aspect.
The three pillars of socialized old-age care
According to the resources of the pension from the state, enterprises and individuals, the three pillars of basic endowment insurance, enterprise annuity and individual commercial endowment insurance have been formed.
"The first pillar of the pension is that the state will come up with some resources to carry out the pension." In cities and towns, it is manifested in social security, pension insurance and other measures; in rural areas, there is a guarantee mechanism for low-income people. In general, the level of old-age care in cities is higher than that in rural areas. But even in cities, the money is still not enough overall. One of the major problems faced by urban workers is that if there is no other means to increase their income after retirement, the material living standards in the old age stage will be greatly reduced. There is a technical term called substitution rate, for example, the original salary of 1000 yuan, after retirement to take 300 yuan, the replacement rate is 30%, such a replacement rate is relatively low. How can we ensure a high quality and dignified old age? Although the social security fund has a considerable size, it is actually still very small compared with the material needs of the elderly population. ”
According to the "China Pension Actuarial Report 2019~2050" released by the World Social Security Research Center of the Chinese Academy of Social Sciences, the basic pension insurance fund for employees of urban enterprises across the country will exhaust the accumulated balance around 2035, and the current balance in 2050 may reach -11.28 trillion yuan. That is to say, if you were born after 1975, you will theoretically face the "short position" of the pension fund when you retire.
"Therefore, China must vigorously promote the construction of the second and third pillars." The so-called second pillar is the enterprise level. Some enterprises with good benefits have taken out a part of the funds to match the relevant national policies as supplementary pensions, such as pension annuities. In this regard, the state will give some tax incentives. Through the enterprise annuity method, the replacement rate can be slightly increased, such as another 20%. However, not all businesses are so effective in operation, and the scale of the second pillar is more limited than that of the first pillar. ”
China is gradually establishing an enterprise annuity and occupational pension system, of which the enterprise annuity system is oriented to enterprises and their employees, and the occupational pension system is oriented to government agencies, institutions and their staff. Although the scale of annuity is increasing year by year, it is developing slowly. According to the data released at the end of 2020, the annuity system has covered nearly 66 million employees, and the cumulative scale of the fund has exceeded 3.1 trillion yuan.
"Therefore, the state advocates the vigorous development of market-oriented pension methods through commercial means, which is the so-called third pillar." Financial means are an important means to promote the development of the third pillar, almost all financial business sectors, such as banking, securities, insurance, trusts and funds, including public and private funds, are involved in the construction of the third pillar of the state to build a pension. But overall it is in the ascendant. ”
"The proportion of the first pillar in our country is much higher than that of almost all other countries in the plate of the whole pension." Our country mainly relies on the first pillar, and the second and third pillars have yet to be built. Adding these three pillars together, The overall replacement rate in our country may currently be a generation behind that of European and American countries. It may take another twenty or thirty years before we can bring the replacement rate almost equal to the current level in Europe and the United States. This is a daunting task. ”
At present, as the third pillar of commercial endowment insurance, it is still basically in a state of absence. Professor Jin Li believes: "China's financial support for the cause of old-age care is still in the early stages of implementation, and many specific difficulties have been encountered, which has limited the rapid development of the third pillar. I also made some suggestions in this regard at this cppcc meeting and before the meeting, such as trust for the elderly. The Ministry of Human Resources and Social Security is now leading a possible plan for urban workers to delay retirement, and the policy is being promoted in an orderly manner. This is all an attempt to solve the big problem of insufficient resources for the elderly and low replacement rate. In Professor Jin Li's view, reforming the trust industry and applying it to the pension cause is a feasible way to promote the development of the third pillar.
Innovative financial system, trust pension is promising
The important basis of socialized old-age care is to provide centralized residence and care services for the elderly, but there are many problems in this regard. Professor Jin Li said: "Although the state has also run some pension institutions, but the national resources are limited, it is still necessary to encourage commercial institutions to raise funds from the hands of the elderly and from the society to run pension institutions through market-oriented methods." However, in the actual operation process, various reasons have led to many pension institutions that have not really used the funds for the construction of pension facilities, but have been invested in other more profitable areas. After the money is spent, pension institutions frequently run away and explode thunder incidents, which greatly hurts the interests of many ordinary people and the confidence of the elderly through commercialization. Professor Kim Lee's proposal is aimed at such a social situation. He said: "We suggest that at the national level, we will support the institutional development of the socialization of the elderly through the construction of a standardized market. First of all, let the socialized pension institutions be more sound in the financial system, and ensure that the funds are earmarked and truly used for pension facilities and pension services. This kind of special funding mechanism, which is very suitable for the system in the financial field, is trust. ”
"The trust industry is characterized by being entrusted by others and managing wealth on behalf of others. Its mechanism is very flexible, the scope of application is very wide, can do all-round, multi-level capital allocation, so that funds can play a long-term, maximum benefit. This is actually a very advanced institutional framework. "Professor Jin Li said that pooling funds for infrastructure construction has a model that can be used as a reference in the trust industry - REITs." The country's large public infrastructure, such as high-speed rail, large power plants, and wharves, requires a lot of money, and it used to be state investment. Countries don't have as many resources, so the pace of a lot of investment is limited. The current approach to financing society using public infrastructure as collateral is called REITs. It is actually structured with trusts. ”
The pension industry is also the country's public basic undertaking, so it can learn from such a structure. But there are two problems with borrowing from this architecture, one is who will invest, and the other is where to invest.
First of all, the question of who will invest, now the trust system is not for ordinary people, only for high-net-worth people. "Because of its high degree of flexibility, it could bring more risk." Ordinary people, especially low- and middle-income groups, will face excessive risks when they use trust structures to achieve higher returns, and may also produce systemic financial risks, and even affect the country's financial stability and social stability. Therefore, the country's long-term policy is to set a higher threshold for the trust industry. Therefore, ordinary people generally do not know much about trusts. Trusts have actually become the exclusive tools of high net worth and high income earners. Trusts use these people's funds in all aspects of finance, such as buying and selling stocks, making private equity investments, public funds, private funds, and even some of them investing in real estate. ”
"This involves the reform of the trust industry. For example, REITs, if you only leave this opportunity to high-net-worth individuals, is not in line with the goal of common prosperity in our country. Therefore, through the reform of the trust structure, the money of ordinary people can be involved, and some guarantee mechanisms can be designed to reduce its risk. Although everyone's money is small, the combined number of people is large, which can also bring massive financial support to the development of key industries in the country. In fact, this is different from what the trust did before. Technical terms are called umbrella trusts. It turned out that this was illegal and non-compliant. But this is the people's yearning and expectation for financial services. So now the regulatory authorities are also creating a more appropriate legal system environment for this purpose. ”
The second is the question of where the funds raised will go. "Many of China's traditional industries, especially manufacturing, are facing insufficient effective demand, industrial saturation or even excess. However, there is a huge gap in the satisfaction of pension needs, so the state supports the development of the pension industry, and it is also judged that there will be no excess and waste in the future. The state encourages the development of old-age facilities, and through this trust structure, a large amount of social capital can be attracted. At the same time, the state gives some tax incentives and policy protection. This can greatly enhance the enthusiasm of social capital, so that more money, not only the money of elderly friends, but even the money of middle-aged and young people can be invested in pension service related industries. ”
It can be seen that this system design has played a role in providing reliable investment channels for ordinary people's pension funds and supporting the state to build pension infrastructure with one stone. At the same time, this is also a measure to let the trust industry clean up its roots and return to serve the construction of the country. "The trust industry has done some things in the past that do not really support the country's economic development and the real economy, and now it also needs to be rectified and returned to the roots." One of its origins is to use the huge institutional advantages of the trust mechanism to create some professional and reliable structures that meet the needs of China's economic development. For example, dozens, hundreds or even thousands of people with pension needs, pool their money, set up a special account, provided by the trust institution to provide a credit guarantee, supervision to ensure that the money is not misused, to ensure the long-term sustainable development of pension institutions, but also to ensure the welfare of all investors. This is one of the original intentions of our proposal for the construction of a financial trust for the elderly. ”
"The proposal has received a lot of support and encouragement from the regulatory authorities, who also helped to design it to see if more other services can be provided on this basis to solve the problem in both aspects." On the one hand, older people have concerns about the risk of financial assets. This problem can be basically solved through some formalization construction. On the other hand, pension institutions have a relatively long investment cycle for various reasons, and the rate of return is relatively low, because the entity is generally not as profitable as doing finance, so the pension institutions are not attractive enough to social funds. But it is also extremely needed by the country, and it is also supported by stable and sustainable demand. Therefore, we believe that the state should come up with some policies to guide social funds into this industry. In fact, trusts are playing an increasingly important role in guiding social capital into areas that the state needs to support. ”
Strengthen public financial knowledge education
The development momentum of the third pillar is insufficient, in addition to the urgent need for institutional improvement, the lack of public financial common sense is also an important reason, that is, the public does not understand the way of providing for the aged through personal finance, and then has doubts. As mentioned earlier, the reform of the trust system can also provide a safe and reliable investment channel for ordinary people's pension investment, with considerable returns, and dispel the investment concerns of ordinary people. "On the one hand, the state has vigorously promoted the construction of financial infrastructure, designed some structures in the system, and given ordinary people a safer and more stable investment channel with relatively medium returns." Reduce the financial risk of ordinary people in low- and middle-income groups and reduce their anxiety. Regarding the design of the national system, we are constantly promoting and calling through various means, and the relevant departments of the state are also actively responding and conducting various studies. But it's a relatively long process. ”
Therefore, Professor Jin Li believes that while promoting the innovation of the national financial system, it is also necessary to popularize financial science for the public, which is a more effective way in the short term. Ordinary people are harmed by various financial chaos, and one of the important reasons is the lack of reliable sources of financial common sense, which leads to risk awareness to two extremes. "Either all the money is not risky, or you want to take the risk, you want to make a lot of money, and you end up putting all your money into it." The rich will not have serious difficulties if they lose money, nor do they need state relief, but if ordinary people take a financial risk, their life savings may be destroyed. Therefore, the state has paid more attention to the money of ordinary people. Regulatory leaders even said that you should not think about more than 10% of the return, more than 10% may have to make a provision for the loss of all the principal, the return of more than 8% or even 6% to consider the risk, to prompt the risk. But in fact, through trusts and some products with higher thresholds, many high-income groups have an average yield and an annualized yield of more than 10% for a long time, or even higher. ”
Professor Jin Li said: "By vigorously promoting investor education, especially for ordinary people, to enhance the awareness of the coexistence of risk and return, establish a mature risk awareness, and appropriately bear risks, it is helpful for long-term financial health." Therefore, there is a need for some financial institutions to provide professional advice. However, now some professional institutions themselves are not strong in professional ability, one is limited ability, and the other is that the main purpose of some practitioners is not to help customers, but for his own sales performance. ”
Therefore, Professor Jin Li believes that academic institutions and scholars such as Peking University have a responsibility to help improve the level of financial institutions. "The first is good publicity. Second, some basic wealth management tools that are inclusive will also be provided in the future. Improve their level by hosting websites, cooperating with banking associations, trust associations, etc., and serving as the chief expert of the China Banking Association. As an academic institution, we can't do much about science on our own. Financial institutions, industry associations, etc. are now spending a lot of effort to do investor education. ”
As a scholar, Professor Jin Li also promotes the solution of this problem by writing financial science books and giving lectures. One of his books is called Walking with Wealth: Kim Lee's General Knowledge of Wealth Management. "I hope to give ordinary people more science popularization." And this book is indeed holding the original intention of inclusiveness, and all the royalty income of this book is donated for the cause of financial science popularization. I sometimes give lectures to everyone, and they are basically inclusive and free. I used to do a course on the audio platform called 'King-Lee's Wealth Class'. Professor Jin Li said that due to various reasons of the platform, it has made a paid course, but the proceeds have been donated to Peking University.
Pension finance in addition to increasing income but also involved in saving expenditure, the reporter asked whether the highest proportion of pension expenditure is medical expenditure. Professor Jin Li said: "I am not an expert in this area, and I suggest you interview Professor Liu Guoen. The reporter found through the data that Professor Liu Guoen's research showed: "The medical expenses of any individual in the 18 months before death are significantly higher than the usual period of time." Comparing the medical expenses of individuals in the 40-50 and 70-80 age groups in the 18 months before their death, the difference between the two age groups is actually not large. This means that the increase in human life expectancy is a blessing rather than a burden. Older adults need more care and care during non-critical illnesses than expensive medical services. If care and care are not done well, it is likely to lead to the transformation of non-medical services into medical services, resulting in a serious waste of medical resources. The reporter saw that article 36 of the Opinions of the State Council on the Implementation of the Key Work Division of the Government Work Report this year clearly states that "promote the combination of medical and health care and health care, and steadily promote the pilot of the long-term care insurance system." A large proportion of each person's pension reserves are consumed in the last year or two of medical expenses. In the obituary issued by Peking University, almost all the causes of death were "ineffective medical treatment due to illness.". But what determines the last year or two is the joint efforts of each person's own life and the work of all aspects of the country.
Interview Notes: Finance should serve the national strategy
At the end of the interview, Professor Jin Lee talked to reporters about his experience of returning to China. "I've been very interested in China since about 2006, when I was a teacher at Harvard. After President Foster, the first female president of Harvard, took office, the first country to visit in 2008 was China, because she felt that China was too great and too great, and there must be a very strong interaction between China and the United States in the future. I was one of the accompanying members of the delegation, which consisted of seven people. In Beijing, we met Xi Jinping, then a member of the Politburo Standing Committee and vice president. ”
"Later, I think that although I have been able to develop smoothly in the United States, China has cultivated me, and I still hope that after I have achieved success, I will have the opportunity to serve the motherland." Because I did not know much about the domestic situation in China at that time, I participated in many research activities and wrote more than a dozen cases of enterprises related to China, which were used by universities around the world after being published at Harvard Business School. Later, domestic universities contacted me. My initial idea was to report to Harvard in a half-hour way and return to China for six months a year. ”
"At this time, my leader went to Oxford University in the United Kingdom as dean of business school. He suggested that I go to Oxford University, and an agreement was reached that I would be a tenured full professor at Oxford University and a chair professor at Peking University. That's what happened in 2012. Three years later, after much thought, I resigned from Oxford University as a part-time tenured full professor. I think that at Peking University, I can do more things for the country and have a more fulfilling life. ”
The reporter asked about the comparison between Harvard, Cambridge and Peking University. Professor Kim Lee said that all three universities are very remarkable schools. "Peking University has produced world-class leaders and scholars, closely integrating its own destiny with the fate of the country. Peking University is the university with the most mission, the most ideal and the most feelings, and it is worthy of being the temple of China's high-level academics. Although I joined Peking University relatively late, through the contacts with colleagues, leaders, students and alumni, I feel that Peking University has a spirit in my bones from the bottom of my heart. Professor Jin Li also talked about an interesting phenomenon, that is, many alumni he knows criticize Peking University harshly while donating money for Peking University and helping Peking University develop from all aspects.
On the question of what kind of discipline layout will affect the future development of Peking University, Professor Jin Li said: "I think the financial discipline is one of them. The current appointment of the school as the deputy director of the Faculty of Economics and Management is hoping to strengthen the overall coordination of the future financial disciplines. On the one hand, I have made suggestions and suggestions for the country's future economic construction, especially the construction of the financial system, through the way of participating in the administration and discussion of state affairs. On the other hand, it is to gather consensus and transmit the country's good policies to the society and to Peking University. China's finance is very academic, but it can do better in terms of policies and the design of major policies that affect the country's future financial development. In terms of finance, China has long had to compete with european and American countries, and there are still huge shortcomings in China's system construction. First, China's financial regulatory power is relatively weak. Second, China's marketization force is weak, and the market mechanism is still relatively superficial in financial innovation - real innovation, not institutional arbitrage. Therefore, how our academic ability in finance can be projected into policy supervision and business model innovation, there is still a lot of room for display. ”
From Professor Jin Li's life experience, academic management, and proposals in the CPPCC, it can be seen that he is concerned about the development of Peking University and the well-being of the society from the bottom of his heart, and is willing to make practical contributions from his own profession. A few days ago, the second meeting of the first session of the Professional Committee of Pension Trusts of the China Trust Industry Association was held in Beijing, and Professor Jin Li presided over the meeting as the director of the committee, and the matters he proposed entered the practical level.