enterprise annuity is a supplementary pension system, which refers to the supplementary pension insurance system established independently by enterprises and their employees on the basis of participating in the basic pension insurance according to law.
enterprise annuity is an important supplement to the national basic old-age insurance, and it is the "second pillar" of China's improving old-age insurance system for urban workers (consisting of basic old-age insurance, enterprise annuity and personal savings old-age insurance). In countries with modern social insurance system, enterprise annuity has become a common supplementary pension plan for enterprises, also known as "enterprise pension plan" or "occupational pension plan", and has become an important part of the old-age insurance system in the host country.
The Measures for Enterprise Annuities have been reviewed and adopted at the 114th ministerial meeting of the Ministry of Human Resources and Social Security on December 2, 216, and reviewed and approved by the Ministry of Finance, and will come into force on February 1, 218.
Payment of annuity:
By establishing personal accounts, enterprises and employees pay insurance premiums at a certain proportion on a regular basis (in which employees can choose to pay the proportion or apply to give up joining the enterprise annuity scheme), and the level of enterprise annuity when employees retire depends on the scale of capital accumulation and investment income. Its basic characteristics are:
(1) simple and easy to operate, with high transparency;
(2) The payment level can be appropriately adjusted according to the economic situation of the enterprise;
(3) Insurance premiums paid by enterprises and employees are exempt from taxation, and their investment income is given preferential tax reduction and exemption;
(4) The individual employee bears the relevant investment risks, and the enterprise does not bear the obligation to pay insurance beyond the regular payment in principle.
The advantages of annuity payment are as follows:
(1) It is simple and flexible. The employer does not undertake the obligation to provide a certain amount of pension in the future, but only needs to set a certain contribution rate according to the pre-calculated pension amount, and does not undertake actuarial responsibility. This work can be undertaken by life insurance companies;
(2) Pensions are included in personal accounts, which are very attractive to employees. Once participants terminate their pension plans before retirement, they can have a wide range of options to dispose of their account balances;
(3) The enterprise annuity of this plan does not need to participate in the reinsurance of the termination of the pension plan. If the employee encounters major economic difficulties, he can terminate the pension plan at any time without taking any responsibility.
Paying an annuity also has its own shortcomings:
(1) The pension of employees at retirement depends on the amount of pension in their personal accounts, and the pension level of employees of different ages participating in the pension plan is quite different after retirement;
(2) The pension in the personal account is greatly influenced by the investment environment and inflation, and it is difficult to maintain and increase the value of the pension in the case of persistent inflation and poor investment returns;
(3) Paying an annuity encourages employees to receive the pension in one lump sum when they retire, and terminates the pension insurance relationship. However, retirees often have to endure higher income tax rates because of the relatively large amount of one-time payment; In addition, the pension that pays the annuity is completely decoupled from the pension of the social security plan, and it is easy for different people to have a high or low pension replacement rate.