Pension reform covering 1 billion people accelerates the establishment of the worlds largest social security system

category:Finance
 Pension reform covering 1 billion people accelerates the establishment of the worlds largest social security system


During the period of the 14th five year plan, the reform will continue to advance in depth, and its goal is to improve the multi-level social security system covering the whole people, balancing urban and rural areas, fair, unified and sustainable.

Pension insurance covers nearly one billion people

According to the 13th five year plan outline for the development of human resources and social security, by the end of the 13th five year plan, 425 million urban employees and 520 million urban and rural residents will be covered by basic endowment insurance, with a total coverage of 975 million.

Lu Aihong, a spokesman for the Ministry of human resources and social security, said at a press conference in the third quarter of 2020 that by the end of September, the number of basic endowment insurance, unemployment insurance and work-related injury insurance had reached 987 million, 212 million and 263 million respectively, all of which had completed the 13th five year plan ahead of schedule.

During the 13th Five Year Plan period, the number of people covered by basic endowment insurance increased by 130 million: from 858 million at the end of 2015 to 987 million at present, and the system coverage rate exceeded 90%. A large part of the 130 million are flexible employees, new business types (Internet, express) and small and medium-sized enterprises (SMEs) with migrant workers as the main body.

The implementation of the national insurance plan is an important reason for the substantial increase in the number of people participating in endowment insurance. Through the implementation of the national insurance program, the registration of key groups such as employees of small and medium-sized enterprises and flexible employees has been improved, which has promoted their active participation in insurance and long-term stable payment.

The social security problem of flexible employees is still the focus of the next step. Improving the social security system for flexible employees is also included in the 14th five year plan. Zeng Xiangquan, director of the China Employment Research Institute of Renmin University of China, said that flexible employees have long working hours and unstable income, and social security is still a core problem they are facing. The main obstacle for flexible employees to participate in social security is the identification of their identity, which needs to be improved in the next step.

From the perspective of income and expenditure, the scale of endowment insurance fund has been expanding during the 13th Five Year Plan period, and its security capacity has been continuously enhanced. After the fund income exceeded 3 trillion yuan in 2015, it crossed the 4 trillion and 5 trillion mark in 2017 and 2018, and the basic endowment insurance fund income reached 5.7 trillion yuan in 2019. In addition, in recent years, the accumulated balance of endowment insurance fund has also increased significantly, from 3.99 trillion yuan in 2015 to 6.29 trillion yuan in 2019.

Hu Xiaoyi, former Vice Minister of the Ministry of human resources and social security and President of the China Society of social insurance, recently said that in addition to individual and employer contributions, the central and local governments should arrange financial subsidies of more than 1 trillion yuan every year. Among them, including the pension fund subsidies for enterprise employees, pension fund subsidies for institutions and institutions, and pension fund subsidies for residents. These financial subsidies have become an important contribution channel for the pension security system.

Continuous progress of reform

China launched a new round of pension reform in 2013. Although there is no complete top-level design of endowment insurance, a series of major reforms have been launched in succession following the principle of mature one, launch one.

According to the 2019 annual report on entrusted operation of basic endowment insurance fund released by the National Council of social security fund, by the end of 2019, the total assets of the basic endowment insurance fund invested and operated by the National Council of social security fund of all provinces were 1076.788 billion yuan, with the investment income of 66.386 billion yuan and the investment return rate of 9.03%.

According to the report, since the formal launch of market-oriented investment operation at the end of 2016, the accumulated investment income has reached 85.069 billion yuan, which has achieved the goal of maintaining and increasing value.

Tang Jisong, vice president of China social insurance society, wrote that the investment and operation of pension funds is related to the living standard of each of us after retirement, and whether everyone can enjoy more adequate pension security in the future.

The end of 2020 is an important time node for the transfer of state-owned assets to enrich the social security fund. According to the established timetable, at the central level, qualified enterprises will be basically completed by the end of 2019, and those with difficulties can be completed by the end of 2020; at the local level, the transfer work will be basically completed by the end of 2020.

According to the data of the Ministry of finance, by September 2019, the central level has completed the transfer of three batches of 67 central enterprises and central financial institutions, with the total transferred state-owned capital of about 860.1 billion yuan.

In July 2018, China established the central adjustment system of basic endowment insurance fund for enterprise employees, which is used to balance the surplus and shortage of endowment insurance fund among local governments. According to the budget for 2020, the central adjustment fund is expected to reach 739.823 billion yuan this year, an increase of 109.523 billion yuan over last year.

Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, believes that although the central adjustment system can alleviate the imbalance of endowment insurance funds among regions to a certain extent, it is not the fundamental solution. The next step is to realize the national overall planning of the basic endowment insurance fund for employees as soon as possible.

Although China put forward the multi pillar old-age security system in the 1990s, the development of each pillar is not very balanced, showing the situation that the basic endowment insurance is the only one.

With the deepening of aging, the basic endowment insurance system is facing increasingly severe challenges. In 2019, 18.1% of Chinas population is over 60 years old, and 12.6% is over 65 years old.

Suggestions of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China (CPC) introduces that under the current system framework, the basic endowment insurance fund for enterprise employees across the country is expected to be unable to offset the expenditure in the current period by 2029, and the accumulated balance will be exhausted around 2036; the overall planning fund for enterprise employees basic medical insurance is expected to have accumulated deficit in 2024. If the policy of delaying the statutory retirement age is not implemented, the dependency ratio (number of employees / retirees) will decrease from 2.65:1 in 2019 to 1.03:1 in 2050. The report of the 19th National Congress of the Communist Party of China clearly points out that a multi-level social security system covering the whole people, balancing urban and rural areas, clear rights and responsibilities, appropriate security and sustainable security should be established in an all-round way. A sound and sustainable multi-level social security system has been included in the fourteenth five year plan. Cartography / Zhang Yijun source: Guo Chenqi, editor in charge of first finance and Economics_ NBJ9931

Suggestions of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China (CPC) introduces that under the current system framework, the basic endowment insurance fund for enterprise employees across the country is expected to be unable to offset the expenditure in the current period by 2029, and the accumulated balance will be exhausted around 2036; the overall planning fund for enterprise employees basic medical insurance is expected to have accumulated deficit in 2024. If the policy of delaying the statutory retirement age is not implemented, the dependency ratio (number of employees / retirees) will decrease from 2.65:1 in 2019 to 1.03:1 in 2050.

The report of the 19th National Congress of the Communist Party of China clearly points out that a multi-level social security system covering the whole people, balancing urban and rural areas, clear rights and responsibilities, appropriate security and sustainable security should be established in an all-round way. A sound and sustainable multi-level social security system has been included in the fourteenth five year plan. Drawing / Zhang Yijun