What Is Endowment Insurance?

Endowment insurance, the full name of social basic endowment insurance, is the basic principle of the state and society in accordance with certain laws and regulations in order to solve the labor age limit for workers who have reached the state's termination of labor obligations or to withdraw from employment due to old age. A social insurance system established by living.

Endowment Insurance is a national basis

China's endowment insurance consists of four levels (or parts). The first level is basic endowment insurance, the second level is enterprise supplementary endowment insurance, the third level is personal savings endowment insurance, and the fourth level is commercial endowment insurance. In this multi-level pension insurance system, basic pension insurance can be called the first level and the highest level.

Basic retirement insurance

Endowment insurance is based on the security of the elderly

First, it is enforced by national legislation. Enterprise units and individuals must participate. Those who meet the eligibility requirements can receive pensions from the social insurance department.

The second is the source of endowment insurance costs, which are generally borne by the state, the unit, and the individual, or both by the unit and the individual, and achieve extensive social mutual aid.

Third, endowment insurance has a social nature, which has a great impact. There are many people enjoying it for a long time, and the expenses are huge. Therefore, special agencies must be set up to implement modernized, professional, and socialized unified planning and management.

The establishment of an endowment insurance system is conducive to the replacement of the old and the new, and the rationalization of the employment structure; it provides basic living guarantees for the elderly and supports them, which is an important measure to cope with the aging of the population and is conducive to social stability. ; Can inspire young people to forge ahead, raise wages, provide security for retirement, and help promote economic development from the side.

The issue of old-age care is not only a social issue, but also a global issue. It concerns the economic and civilized development of a country or society, and we need to pay sufficient attention to it. Due to the wide implementation of endowment insurance, the insured enjoys benefits for a longer period of time, and the scale of income and expenditure is huge, therefore, the government must set up a special

There are three modes of implementing endowment insurance systems in countries around the world:

According to the type of population, the structure of China's social endowment insurance system can be divided into three parts: endowment insurance for employees in urban enterprises, endowment insurance for institutions and institutions, and endowment insurance in rural areas. China's original social endowment insurance system was the urban endowment insurance system. The old-age insurance system for personnel of state agencies and institutions was separated from the township employee's old-age insurance system. Later, during the system reform process, it experienced a process of merger and separation.

On December 23, 2014, at the 12th meeting of the 12th National People's Congress Standing Committee, it was clear in the report on the overall promotion of the construction of the urban and rural social security system that the reform of the endowment insurance system of government agencies and institutions was established, and unity with urban employees was established. Pension system. The contradiction of the "dual-track" pension system will be resolved from the system and mechanism.

The endowment insurance system for employees in China's enterprises was established in the early 1950s, and was revised twice in 1958 and 1978, respectively. In 1997, the State Council promulgated the "Decision on Establishing a Unified Basic Pension Insurance System for Enterprise Employees" (Guo Fa [1997] No. 26). China has established a unified basic pension insurance system for enterprise employees. The endowment insurance system has established individual accounts for basic endowment insurance for employees. Since then, China has gradually established a multi-level endowment insurance system. For this reason, China's endowment insurance system consists of three parts. The first part is basic endowment insurance, the second part is enterprise annuity, and the third part is personal savings endowment insurance.
In the 1980s, the pilot implementation of pension social social pooling began to explore reforms. In the 1990s, reforms were fully launched and continuously deepened. A fund-raising model shared by the state, enterprises, and individuals was established, and the basics of combining social pooling and personal accounts were determined The model unified the basic old-age insurance system for enterprise employees. The social co-ordination part adopts a pay-as-you-go model to balance the unit burden; the personal account part adopts an accumulation model to reflect personal responsibility, all formed by individual contributions. Endowment insurance funds are mainly formed by the payment of contributions by enterprises and employees. Generally, the contribution ratio of enterprises does not exceed 20% of the total wages of the enterprise, and the individual contribution ratio is 8%, which is withheld and paid by the employer.

The basic endowment insurance system that combines social pooling and personal accounts is a new type of basic endowment insurance system pioneered by China in the world. This system adopts the traditional basic pension insurance fund raising model in the collection of basic pension insurance funds, that is, the state, the unit, and the individual bear the burden; the basic pension insurance fund implements social mutual aid; and it adopts the calculation and distribution of the basic pension. The structured method of accrual and payment emphasizes the incentive factors of personal account pensions and the differences in labor contributions. Therefore, the system not only absorbs the advantages of the traditional endowment insurance system, but also draws on the advantages of the personal account model. It not only reflects the traditional social insurance's social mutual aid, decentralized risk, and strong security features, but also emphasizes The employees' self-protection consciousness and incentive mechanism. With the continuous improvement of the system in Chinese practice, it will have a profound impact on the development history of the world's endowment insurance.
The importance of China's endowment insurance system can be summarized into the following five aspects: the establishment of a sound social security system to provide the appropriate level of basic living security for the majority of employees and retirees; the improvement of the social security system is the reform of state-owned enterprises and the economic structure The urgent need for adjustment; a sound social security system is conducive to improving residents' psychological expectations for reform, increasing immediate consumption, and promoting the sustained and rapid growth of our economy; improving the social security system is a requirement for developing the labor market; improving the social security system is Address the needs of an ageing population.
A series of endowment insurance systems formulated in accordance with the above principles have formed a consensus on establishing the three pillars of the endowment insurance system. The first pillar is the basic old-age insurance combining social pooling and personal accounts. Since the 1980s, the Chinese government has established a basic endowment insurance combining social pooling and personal accounts on the basis of trials and summing up practical experience. Basic endowment insurance is the foundation of the entire social insurance system. Funding for basic insurance comes from the tripartite state, enterprises and individuals. National legislation or administrative measures require that companies must be compulsory to participate in insurance. The basic endowment insurance fund is formed by the joint payment of enterprises and individuals. The social pooling fund is formed by part of the enterprise's contribution, and the employee's personal account fund is composed of the entire individual's contribution and the enterprise's contribution form. To ensure that workers receive basic living security. The second pillar is the enterprise annuity that has gradually become clear in recent years. As early as 1991, according to the "Decision of the State Council on the Reform of the Enterprise Employee Pension Insurance System" (Guo Fa [1991] No. 33) and the "Opinions on Establishing an Enterprise Supplementary Pension Insurance System" (Labour Department [1995] No. 464) Document, to establish a multi-level social pension insurance system, enterprise annuity is one of them. The enterprise annuity is borne by the enterprise and the staff or is entirely borne by the enterprise. The enterprise voluntarily participates in accordance with its operating benefits. The government grants certain preferential policies to the insured enterprises, which are implemented by the national macro guidance and internal decision-making of the enterprise. Enterprise annuity is an additional insurance after an enterprise pays its social insurance premium obligations. It is mainly an enterprise that insures employees for capital contribution based on their own operating conditions. The third pillar is personal savings endowment insurance. Personal savings endowment insurance is voluntarily insured by individuals according to their own needs, and the insurance premiums are fully borne by the insured. It mainly includes voluntary personal savings and personal purchase of commercial endowment insurance.
The above three pillars theoretically combine the redistribution function, savings function and insurance function of a pension insurance system into a common pension insurance system.

On December 29, 2009, the General Office of the State Council issued a notice to forward the Ministry of Human Resources and Social Security,

Narrow funding for pension funds

As far as China's population structure is concerned, China has entered an aging society. In order to ensure the basic life of the elderly population, it is imperative to raise more pension funds. Although as early as 1991, the State Council's Notice on Deepening the Reform of Enterprise Employee Pension Insurance System (Guo Fa [1995] No. 6), one of the goals of the reform of the pension insurance system was to require the establishment of a multi-channel pension security system for funding sources. However, at present, the funding of China's endowment insurance fund is still narrow. The main sources are the national budget and the productive income of the company's non-operating expenditures. Moreover, the state does not encourage people to save more pensions, while some developed countries in the world, such as the United States and Japan, encourage more pensions to reduce the burden on national finances. With the aging of our society, if we do not take measures, our financial burden will become heavier.

Mismatch between administrative management system and pension system

First of all, the current level of social endowment insurance in most parts of China is relatively low. The main reason is that our country's administrative model for endowment insurance is localized management. That is, the municipal (county) endowment insurance agency is managed by the local government. County) endowment insurance agencies will inevitably become the preferred targets for local government interests. The overall goal of the provincial government is to comprehensively balance the interests of the province's cities (counties) and industry sectors, so that the conflict between the interests of the provincial pension insurance institution and the city (county) pension insurance institution has led to the provincial overall planning. It is difficult to make overall plans across the country, and it is even more difficult to make high-level plans across the country. On July 1, 2011, the State Council launched a pilot program for urban residents' endowment insurance, with the goal of covering 60% of the country and by 2012. Obviously, in terms of "quantity", China's social endowment insurance will be a perfect transformation, but after the above analysis, it is not difficult to find that this hierarchical administrative management system makes it difficult to achieve a "qualitative" leap at the provincial level and national level.

Secondly, as the collection, expenditure and management are all responsible for the social security department, administrative staff are wasted. China's social endowment insurance policy formulation, fee collection, investment operation, supervision and investigation are all responsible for the social security department. The Social Security Bureau organizes a group of professionals to carry out financial accounting of the enterprise, monitors the salaries of employees of the enterprise, and conducts investigation, audit and collection of various enterprises through professional collection and management software. This process caused additional expenditures on social security funds, and even more than 40% of social security funds in some places were wasted as administrative costs. Compared with China, the collection of pensions in Chile, Singapore, the United States and other countries is operated by the tax department. Independent government or private fund management companies are responsible for investment. Finally, the social security department is responsible for the pension insurance expenditures and policies. Development of standards.

The existence of the dual track system has caused inequity

The design and operation of the endowment insurance system for Chinese government agencies and urban employees is very different from that of urban enterprises, and a dual-track system has emerged. In the 1990s, the old-age insurance for urban enterprise employees initially established a partial accumulation system combining social pooling and personal accounts, that is, contemporary pension expenses consist of two parts. One part is social pooling, that is, intergenerational transfer payments, and the other part is paid by a certain percentage of contemporary wages. The endowment insurance system of government agencies and institutions still maintains a pay-as-you-go system, that is, the income of the young working generation is used to pay for the retirement costs of contemporary retirees (intergenerational transfer). Due to the non-uniformity of the system, the dual-track system has also caused imbalances in the insurance participation obligations and treatment levels of employees in urban enterprises, institutions, and institutions, and has caused social conflicts. Some experts said that the dual-track system of social insurance is a major factor in social instability.

Serious misappropriation of pension insurance funds

The 20% of pensions paid by enterprises are included in the social pooling account, and the collection, expenditure, management and supervision of pension funds are all under the responsibility of the labor and social security departments. This will inevitably lead to the phenomenon of "left-hand supervision and right-hand". When the social pension fund in the unified account was used, there was no disclosure in the provinces and cities, and the personal insurance account of the endowment insurance did not report the investment purpose and return rate of the fund, which caused the phenomenon of illegal fund misappropriation to intensify and further spread the impact to the whole country . This lack of constraints and supervision of the management system makes the endowment insurance fund may eventually become a sunk cost without any return on investment. China's population base is very large. In the context of an aging society, this kind of misappropriation of insurance funds will bring a heavy blow to the national finance.

Low profitability of pensions

Judging from the practical results of realizing personal accounts in Liaoning Province, the return on investment of China s pension funds invested in bank agreement borrowings and treasury bonds is lower than 2.5%, which is far lower than the average rate of social wage growth in China. With the improvement of living standards and the effects of inflation and other factors, it is difficult for the low income of pension funds to support the normal life of China's elderly population. Take the United States as an example, the US pension fund is docked with the capital market, and pensions have become one of the three major institutional investors in the US capital market. The United States is gradually scientifically coordinating the safety and profitability of pensions, using investment portfolios, and spreading risks to achieve high returns on pension fund investments with a certain risk (as low as possible). Since the 1980s, pension investment returns in the United States have been above 10% (after deducting inflation factors). In the process of China's reform of the pension fund system, we should learn from the US pension insurance system, based on the partial accumulation system, and realize a model that combines with the capital market.

On October 28, 2010, the Seventeenth Session of the Eleventh National People's Congress passed the "Social Insurance Law of the People's Republic of China", which came into effect on July 1, 2011. According to the "Twelfth Five-Year Plan", the basic pension Insurance is expected to achieve national coordination within five years. In the process of realizing China's pension system from city (county) to provincial-level overall planning, and finally reaching the national overall planning, we have also seen the above problems existing in China's endowment insurance system. The reform of China's endowment insurance system will inevitably form a kind of Trends, so we should explore a social endowment insurance system in line with China's national conditions.

The level of endowment insurance contributions is indeed high

The twelfth meeting of the Standing Committee of the Twelfth National People's Congress held a joint meeting, and made special inquiries in conjunction with the State Council's report on the overall planning and promotion of the construction of the urban and rural social security system. In response to members' inquiries, Vice Premier Ma Kai said that the current level of endowment insurance contributions is indeed high, and the "five insurances and one fund" accounted for 40% to 50% of total wages. He revealed that relevant documents on the integration of government agencies and urban employee pension insurance systems will be issued in the near future and will be further deployed. ^[6]

On March 10, 2015, the press center of the Third Session of the Twelfth National People's Congress held a press conference in the multi-functional hall of the Mediia Center. Yin Weimin, Minister of Human Resources and Social Security, said in response to reporters' questions. The return on investment of insurance funds is lower than the CPI and is in a state of devaluation. Now the basic plan for the investment and operation of social insurance funds has been formed, and it is expected to report to the Party Central Committee and the State Council for approval in the second half of this year.

Yin Weimin said that the investment and operation of the pension insurance fund is an important measure related to the sustainable development of the pension insurance system. ^[7]

In order to reduce corporate costs and enhance corporate vitality, in accordance with the relevant provisions of the "Social Insurance Law of the People's Republic of China" and with the approval of the State Council, starting from May 1, 2016, provinces (regions, regions, The province (autonomous region, municipality) that reduces the unit contribution rate to 20%; the unit contribution rate is 20% and the accumulated balance of the enterprise employee basic endowment insurance fund at the end of 2015 is more than 9 months. The proportion of unit payment is reduced to 19%, and the period for reducing the rate is temporarily implemented for two years. The specific plan is determined by each province (region, city). ^[8]

As of July 6, 2016, 21 provinces and municipalities across the country are eligible to reduce the rate of corporate pension insurance, of which Shanghai has been reduced from 21% to 20%, and the remaining 20 provinces and municipalities are Beijing, Tianjin, Shanxi, Inner Mongolia, and Jiangsu. , Anhui, Jiangxi, Henan, Hubei, Hunan, Guangxi, Hainan, Chongqing, Sichuan, Yunnan, Guizhou, Tibet, Xinjiang, Gansu and Ningxia. ^[9]