The basic pension insurance system for urban employees has changed the most in 20 years. The personal account 2016 interest rate has increased from the average of 2% to 3% in previous years to 8.31%, which is higher than the current majority in the market. .
The basic endowment insurance system for urban employees has changed the most in 20 years. The personal account 2016 interest rate has increased from the average of 2% to 3% in the previous year to 8.31%, which is higher than the vast majority of wealth management products on the market. This will affect 370 million insured persons including institutions, institutions and enterprises. Since the interest rate of the personal account directly affects the future pensions, the interest rate soaring means that the insured person is expected to receive more pensions in his personal account in the future.
However, the incompleteness of the bookkeeping rate increase is good news. The current basic personal pension account for urban employees is an “empty account†operation. Therefore, the interest rate is higher and there is no money on the account, which in turn will lead to an increase in the system debt ratio. In other words, under such a high interest rate, the insured person will be able to receive more pensions in a few decades, and the government needs to make more active institutional arrangements for the relevant funds.
From the perspective of the pension investment market, the average annual rate of return since the operation of the National Social Security Fund was 8.37%, and the average annualized rate of return on the enterprise annuity was only 7.57%. The 8.31% of the bookkeeping rate did make the market quite shocked. ". Some market participants are worried that the high interest rate of basic pension insurance will encourage investment institutions to open up their exposure and adversely affect pension investment.
8.31% from where
The first financial reporter learned from a number of people familiar with the matter that after more than two years of fierce controversy, the reform path of personal accounts has gradually become clear: personal accounts are no longer being implemented, but are going to the nominal accounts of personal rights records. This has won more consensus at the decision-making level.
The Ministry of Human Resources and Social Welfare and the Ministry of Finance promulgated in April this year, the "Regulations on the Standardization of Individual Accounts for Individual Accounts for Staff Pension Insurance", the unified accounting rate for individual accounts of institutions and enterprises and basic pension insurance for enterprises is published annually by the state. The bookkeeping interest rate should be determined mainly by considering factors such as employee wage growth and fund balance, and adjusted by reasonable factors. The bookkeeping rate must not be lower than the bank time deposit rate.
The government department issued a plan to unify and standardize the personal account bookkeeping interest rate of employee pension insurance, and took an important step in the “improvement of personal accounts†proposed by the Third Plenary Session of the 18th Central Committee.
At the beginning of June this year, the official website of the Ministry of Human Resources and Social Security issued a notice saying that the interest rate for personal accounts of urban employees' basic endowment insurance (including government institutions and basic pension insurance for enterprise employees) in 2016 was 8.31%. Prior to this, the average interest rate for bookkeeping was 2% to 3%.
Li Zhen, a professor at the School of Public Administration of Renmin University of China, said in an interview with the First Financial Journal that the original intention of the personal account in the unified account is to establish a partial accumulation system. The rate of return of the accumulation system should be fixed on the wage growth rate rather than the inflation rate.
Li Zhen believes that personal accounts are charged at a one-year bank interest rate, and the long-term funds of employee contributions are short-term. In the past ten years, the one-year bank interest rate is less than 3%, and the average social wage growth rate is over 10 %, the interests of the insured suffer a very large loss, which is an important reason for the decline in the replacement rate of pensions in China.
“Empty account†is the reason why pension personal accounts are accounted for at low interest rates. Because there is no fund, there is no investment income, because no investment income can only be recorded in lower interest. The interest rates of individual accounts in different places are also different. Most provinces and cities are accounted for according to the bank's one-year deposit interest.
According to public information, the interest rate of personal accounts for basic pension insurance for enterprise employees in 2015 was 4.25% in Shandong Province; 2.76% in Liaoning Province; 2.75% in Shanghai and Guizhou Provinces; 2.12% in Guangdong Province; and 1.62% in Anhui Province; Hubei Province is 1.5%.
According to the notice of the Ministry of Human Resources and Social Affairs and the Ministry of Finance, the new method for determining the interest rate for bookkeeping is based on the growth rate of wages, in order to achieve the target replacement rate, and to guarantee the basic life of the insured after retirement.
According to the data released by the National Bureau of Statistics, in 2016, the average annual wage of non-private employees in urban areas was 67,569 yuan, an increase of 8.9% over the previous year. The growth rate dropped by 1.2 percentage points from the previous year. After deducting the price factor, the actual increase was 6.7%.
From the comparison of the data of 8.31% and 8.9%, the new billing rate is fixed on the nominal growth rate of the average wage. In 2016, the basic pension insurance personal account bookkeeping interest rate adjustment rate is equivalent to 93% of the nominal wage growth rate.
A market source told the First Financial Reporter that the relatively high bookkeeping rate of 8.31% also took into account the salary adjustment of civil servants last year. The income growth in the year was relatively large. “For the internal balance, we have more reference to last year’s wage growth. Rate, it is expected that there will be a downward adjustment in the future."
An expert who participated in policy consultation also told the First Financial Reporter that the problem of low interest rate on personal accounts has not been effectively solved in the past 20 years. Now, after the civil servants have joined in, this problem has not only been solved quickly. I also remembered the high interest rate, which can also be regarded as one of the positive meanings of the integration of pension insurance.
How to pay in the future
The keynote set by the Third Plenary Session of the 18th Central Committee for the top-level design of pension insurance is “fair and sustainableâ€. With the completion of the merger, the issue of the sustainability of the pension system has gradually emerged in recent years.
Li Zhen said that the sustainability of the pension insurance system is mainly characterized by affordability, sufficiency and long-term balance of payments. Placing the personal account bookkeeping rate on the wage growth rate can meet the sufficiency indicator, but it poses a great risk to the long-term balance of funds.
The dependence of pension insurance on financial subsidies is increasing year by year, and the provinces with uneven income and expenditure are also expanding. The relevant person in charge of the Ministry of Human Resources and Social Security also recently publicly stated that although the balance of the pension insurance fund is considerable, due to the imbalance of economic development between regions, there are structural contradictions in the uneven distribution of funds, and some regional funds have not received the current income.
According to the Ministry of Human Resources and Social Security, since 1998, the central government has invested 2.57 trillion yuan in corporate pension funds, of which more than 400 billion yuan in 2016, an increase of 12.9% year-on-year, while local finance is also increasing investment, 2016 The provincial and county-level fiscal inputs totaled 66.8 billion yuan, a year-on-year increase of 79.6%.
The accounting interest rate is the most important parameter for calculating the future basic pension of the insured. Under the premise of the “empty account†of the personal account, the accounting interest rate is faced with a high and low dilemma – the insured person is subject to the low Loss, just like in the past 20 years; the increase in the future increases the liabilities of the system, and it is still unknown whether it will be repaid.
Li Zhen believes that the personal account empty account appears to be similar to the bank. The depositors and the insured face the accounts, but there are essential differences. The bank's money is loaned out to make money, and the money in the personal account of the pension insurance is paid out to the elderly and the pension is paid.
“The empty account is the liability of the system. The high interest rate means that the scale of the debt will accelerate and the size of the empty account will accelerate. This is unfavorable for the sustainability of the system. More importantly, how will the future Guarantee that there is sufficient funds to make payments." Li Zhen said.
High bookkeeping rate exceeds market expectations
"This billing rate is too high." The above market participants engaged in annuity operations told the First Financial Reporter that the basic pension fund should pay more attention to safety and lower risk preference than the national social security fund and enterprise annuity, so the expected income Will be lower. However, the state's 8.31% personal account bookkeeping rate exceeds most of the market's investment products.
According to the annual report issued by the National Social Security Fund Council, in 2016, under the circumstances that the domestic stock market fell sharply, the social security fund's investment income was 31.94 billion yuan, and the investment yield was 1.73%. According to the 2015 annual report, the investment return rate of the social security fund in that year was 15.19%. The annual report data also shows that since the establishment of the National Social Security Fund Council in August 2000, the accumulated investment income has reached 822.731 billion yuan, and the average annual investment return rate is 8.37%.
The use of corporate annuity in 2016 announced by the Ministry of Human Resources and Social Security shows that after more than a decade of development, the scale of accumulated funds broke through the trillion-yuan mark for the first time, reaching 110.476 billion yuan, an increase of about 16.3%. However, the number of participating companies increased by only single digits, an increase of 8 in the same period of the previous year. The number of employees involved was 23.25 million, an increase of 90,000 over the same period of last year. The number of participating companies and the number of employees increased very little. Almost in a state of stagnation.
In terms of investment income, in 2016, the national enterprise annuity yield was 3.03%, a record low in the past five years. Historical data shows that from 2012 to 2016, the average annual rate of return on corporate annuities was 5.68%, 3.67%, 9.30%, 9.88%, and 3.03%. The average annual rate of return for the 10 years from 2007 to 2016 is 7.57%, and the level of return in 2016 is much lower than this figure.
The above-mentioned person said that 8.31% of the interest on the book may put pressure on the ongoing market operation of the pension fund, improve the investment income expectations of the principal and the agent, and further transmit to the investment institutions to open up the risk exposure.
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