Personal pension is a supplementary pension insurance system jointly issued by five ministries and commissions, supported by government policies, voluntarily participated by individuals, and operated in a market-oriented manner. It is the country's institutional arrangement for the third pillar of pension.
Personal pensions implement a personal account system, and the payment is entirely borne by the participants. They can independently choose to purchase financial products such as savings deposits, financial products, commercial pension insurance, and public funds that meet the regulations, implement full accumulation, and enjoy preferential tax policies in accordance with relevant national regulations.
.
The 3% levy on personal pensions means that when receiving pensions, they are levied separately at 3%, and the tax paid is included in "wage and salary income."
When an individual receives a personal pension in accordance with regulations, the commercial banking institution in the city where the personal pension fund account is opened shall withhold and remit the personal income tax payable by the individual.
Assume that the current applicable tax rate for taxpayers is 10%. If you pay 12,000 yuan per year to enjoy the tax discount, you can reduce the current tax by 1,200 yuan each year. When you withdraw the principal of 12,000 yuan, you pay 360 yuan in personal tax. In this way, the personal tax is reduced by 840 yuan.
.
If calculated based on 30 years of payment, you can enjoy a tax discount of 25,200 yuan.
Therefore, it is cost-effective in terms of paying taxes.
Some people simply understand the payment of personal pensions as "10% tax when purchasing and 3% tax when receiving", and they can "earn" a 7% price difference in the middle.
In fact, this understanding is not very accurate - because personal pensions will also enjoy long-term investment returns when withdrawing, it cannot simply be understood as only enjoying a 7% tax differential in the middle.
Since my country's personal income tax system adopts a seven-level excess cumulative tax rate, the specific tax savings are different for different income groups.
For people with different tax rates, the higher the tax rate used by people with higher incomes, the higher the tax savings for personal pensions.
For example, people with a taxable income of more than 960,000 yuan will have the highest tax savings, saving 5,400 yuan during the year.
For another example, for people with an annual income between RMB 60,000 and RMB 96,000, after deducting the threshold of RMB 60,000, their taxable income does not exceed RMB 36,000. Regardless of whether a personal pension is paid or not, a 3% tax rate applies.
Since personal pensions are subject to a personal income tax of 3% when receiving them, the tax preferential policy is not attractive without considering the time value.
People with an annual income of less than 60,000 yuan are exempt from personal income tax. This part of the tax-free income will instead need to pay a 3% personal tax when withdrawing after depositing personal pensions.
Preferential tax policy: Each person’s annual pension payment can be deducted before tax, effectively reducing the current personal income tax payment.
Personal pensions use deferred taxation. No tax is paid when investing, but tax is paid when you receive it.
Personal pensions can be deducted as a pre-tax deduction when calculating personal income tax.
Personal pensions can be deducted based on the actual deposit amount before tax, and the annual deduction limit is 12,000 yuan.
Legal basis: "Social Insurance Law of the People's Republic of China" Article 21 New rural social pension insurance benefits consist of basic pensions and personal account pensions.
Rural residents who participate in the new rural social pension insurance and meet the conditions prescribed by the state will receive new rural social pension insurance benefits on a monthly basis.