National overall planning will start next year, and what changes will be ushered in in pension distribution？
National overall planning will start next year, what changes will be ushered in in pension distribution? 2022 pension reform.
According to the established timetable, the basic old-age insurance for enterprise employees will be formally implemented at the beginning of next year, which indicates that the old-age insurance system for employees in China has finally stepped out of regional division and entered an era of national unity since its establishment 24 years ago.
It is one of the important tasks of China’s old-age insurance system reform during the 14 th Five-Year Plan period to realize the national overall planning of the basic old-age insurance for enterprise employees. This year’s Central Economic Work Conference once again proposed "promoting the national overall planning of basic old-age insurance". Recently, the State Council has made special arrangements for the national overall implementation of the basic old-age insurance for enterprise employees.
CBN learned from people familiar with the matter that the spirit of the document "National Overall Reform Plan for Basic Old-age Insurance for Enterprise Employees" will be issued soon. Earlier, Jin Weigang, vice president of China Social Security Society, also publicly stated that China will start to implement the national overall planning of basic endowment insurance for enterprise employees from January 2022 (hereinafter referred to as "national overall planning of endowment insurance").
Many experts interviewed by CBN said that the national overall planning of endowment insurance is the only way to build a fair and sustainable endowment insurance system. After the overall implementation of the national plan, the endowment insurance fund can help each other across the country, and the support capacity of the fund will be greatly enhanced. For the insured, the pension is more secure, the portability is greatly improved, and the gap between regional pension levels will also be narrowed.
The core of national overall planning is unified revenue and expenditure.
The low level of overall planning is a problem that has long plagued the development of the endowment insurance system for enterprise employees in China. At the beginning of the establishment of the old-age insurance system for enterprise employees, the State Council asked all localities to actively create conditions to improve the overall level of pension. However, the overall planning level based on counties and cities did not really change until 2018.
In 2018, China established a central adjustment system and set a timetable for provincial-level overall planning. From 2018 to 2020, the Ministry of Human Resources and Social Security accelerated the progress of guiding and urging provinces to establish a provincial-level overall planning system. According to the Ministry of Human Resources and Social Security, all provinces have started to implement the provincial-level unified collection and support of pension funds.
The fundamental reason for speeding up the provincial overall planning is that the pressure on the income and expenditure of China’s old-age insurance fund is becoming increasingly severe. With the aging of the population, the support burden in China’s old-age insurance is increasing. Relevant data show that in 2020, the dependency ratio of working payers to retirees is 2.57: 1, the income of pension fund is 4,437.6 billion yuan, the expenditure is 5,130.1 billion yuan, and the income and expenditure gap is 692.5 billion yuan.
The burden of support in the central and western regions is heavier, and the pressure of pension payment is greater. After the establishment of real provincial overall planning, the "reservoir" of provincial pension becomes larger, and the regional imbalance of pension funds in the province can be alleviated.
Kong Xianjiang, director of the Social Insurance Bureau of Shanxi Province, wrote in September this year that some cities and counties’ endowment insurance funds are unable to meet their expenses. The centralized management of enterprise endowment insurance funds at the provincial level and the implementation of the "two lines of revenue and expenditure" method of full payment have solved the problem of "guarantee and payment" in these counties and cities.
Take Yangquan City as an example. In 2020, the state will fully implement the policy of reducing and postponing three social insurance premiums in stages. The basic old-age insurance premiums for employees in Yangquan City are only 1.907 billion yuan, while the fund payment is as high as 3.486 billion yuan, with a gap of 1.579 billion yuan. The provincial level has solved the problem of Yangquan city insurance payment as a whole. According to the mechanism of coordinating the gap sharing of governments at all levels at the provincial level, Yangquan county government subsidized the gap fund by 79.03 million yuan, which enhanced the sustainability of the fund.
Kong Xianjiang said that with the aging of the population, the gap of Shanxi’s endowment insurance fund has increased year by year, and the growth of expenditure is obviously higher than that of income. It is urgent to achieve national overall planning on the basis of consolidating provincial overall planning.
The core of national overall planning is that the endowment insurance fund collects and supports at the central level, making the "reservoir" bigger. However, it is difficult to realize the national overall planning of unified revenue and expenditure at the provincial level. As a result, the central government took the lead in introducing the central adjustment system. In the past three years, the central adjustment system has played an important role.
Liu Kun, Minister of Finance, said that since 2018, China has established a central adjustment system for endowment insurance funds to balance the fund burden among regions. This year, the central adjustment fund reached 930 billion yuan, and the central and western regions and old industrial base provinces benefited more than 215 billion yuan, which relieved the pressure of balance of payments in difficult areas to some extent.
Dong Dengxin, director of the Institute of Financial Securities of Wuhan University of Science and Technology, told CBN that in the past three years, the government has done a series of transitional work for national overall planning, including central adjustment, provincial overall planning, transfer of state-owned assets and unified collection of social security fees by tax authorities. These tasks have been completed at present, laying the foundation for realizing real national unified collection and expenditure.
"National overall planning is conducive to giving play to the scale effect of the fund and complementing each other across the country. Its core is the central government’s unified revenue and expenditure, and local governments no longer intervene in the fund’s revenue and expenditure and related management work. " Dong Dengxin said, due to the problems left over from history, it is necessary to have a financial payment sharing mechanism to make the transition from provincial-level overall planning to national overall planning, but the ultimate goal is that the central government will take charge of all revenues and expenditures.
In an interview with the media affiliated to the Ministry of Human Resources and Social Security, Jin Weigang said that in accordance with the central government’s guiding opinions and work arrangements for implementing the national overall planning of the basic old-age insurance for enterprise employees, on the basis of implementing the central adjustment system for the basic old-age insurance for enterprise employees, the national overall planning of the basic old-age insurance for enterprise employees will be implemented from January 2022. In the future, we will gradually promote the overall development of the whole country in the direction of unified revenue and expenditure, and on this basis, we will realize the comprehensive unification of the basic old-age insurance for enterprise employees in terms of systems, policies, management services, etc., including the realization of payment ratio, calculation base, fund revenue and expenditure management, information system, budget preparation and so on.
How to affect pensions
The video and telephone conference on the national overall planning of the basic old-age insurance for enterprise employees held on 16th proposed that the implementation of the national overall planning system of the basic old-age insurance for enterprise employees is a major decision made by the CPC Central Committee and the State Council. This work is related to the vital interests of the broad masses of workers and thousands of households, and to the overall stability of society.
The meeting also proposed to unify the old-age insurance policy and achieve a "national chess game" to better protect the old-age insurance rights and interests of workers and retirees.
Sun Yongyong, an associate professor at the School of Public Administration of Huazhong Normal University, told CBN that the national overall planning is mainly for the financial consideration of the endowment insurance fund, and has no direct impact on the insured’s participation or payment. As far as the payment of pensions is concerned, national overall planning can better ensure that all localities pay pensions in full and on time.
Sun Yongyong believes that "a national chess game" refers to the first, emphasizing that the funds for employees’ basic old-age insurance should be adjusted and used nationwide to improve the utilization efficiency of funds; Second, the relevant rules will be gradually unified. "But it doesn’t mean uniform treatment, because the economic development situation varies greatly from place to place, and it is difficult to achieve the same treatment within a province."
Wang Dehua, a researcher at the Institute of Finance and Economics of China Academy of Social Sciences, told CBN that there is an important problem in national overall planning, which is how to determine the important parameter of payment and treatment "social average wage". All provinces generally adopt the unified way of the whole province when implementing it, but it is still unknown whether it is necessary to be unified when coordinating the whole country.
Wang Dehua believes that after the national overall planning, all provinces should adopt the average social wage of each province, and at the same time design the system of transferring the average social wage between regions.
When consulting the documents of local provincial-level co-ordination, CBN found that most provinces used the average salary of employees in full-caliber urban units in the whole province as the calculation base when calculating and distributing pensions.
Dong Dengxin believes that after the basic old-age insurance for employees is co-ordinated nationwide, the average wage of employees on the job, the basic variable for calculating pension, will be the average wage of employees on the job all over the country. Then, if the pension is calculated based on this base, the pension level in high-wage areas will fall, and the pension level in low-wage areas may rise as a whole, but this means that the relative gap between the highest pension and the minimum pension will be narrowed as a whole among regions. Personally, the monthly pension level of retirees will not drop significantly, but the absolute number should rise slowly.
Another benefit for the insured after the national overall planning is that the portability of endowment insurance has been greatly improved. According to the current provincial overall planning standards, the cross-regional migrants in the province will no longer go through the transfer and connection procedures, and will be merged by the places where they receive benefits when they retire. After the implementation of the national overall planning in the future, the cross-provincial migrants in China will not need to go through the transfer and connection procedures, which is a great advantage for China’s 236 million floating population. (Author: Guo Jinhui)