The most fundamental difference between traditional pension insurance and participating pension insurance is that the predetermined interest rates are set differently.

The predetermined interest rate of the former is determined, while the latter has a guaranteed interest rate, but it is much lower than the former, or there is no guarantee at all, but there is the possibility of investment income.

In terms of product functions, both traditional pension insurance and participating pension insurance have their own advantages and disadvantages. We cannot definitely say which one is better, we can only say which type of people is more suitable.

Roughly speaking, it can be divided into the following categories: The predetermined interest rate of traditional pension insurance is fixed, usually between 2.0% and 2.4%. When to start receiving pensions and according to what amount, after signing the contract

It will be clear when.

Historically, this predetermined interest rate has changed and generally remains at a comparable level to the bank interest rate at that time.

When bank interest rates are high, this predetermined interest rate is also high.

For example, in the era of high interest rates in the late 1990s, the predetermined interest rate for commercial pension insurance was as high as 10%, but currently it does not exceed 2.5%.

Selling Points: Fixed returns, low risk.

Because the return on this type of product is calculated based on the predetermined interest rate stipulated in the contract, it is not affected by changes in external bank interest rates.

Therefore, even in the event of zero or negative interest rates, it will not affect the return rate of pension funds.

For example, although the current interest rate has been reduced to around 3.9%, some pension products sold in the late 1990s still paid pensions based on the return designed for the 10% interest rate at that time.

Disadvantages: Hard to protect against the effects of inflation.

Because the purchased product has a fixed interest rate, if the inflation rate is relatively high, there is a risk of depreciation in the long term.

There is indeed a huge difference between the value of 10,000 yuan ten years ago and the 10,000 yuan today.

Moreover, this part of the funds invested in pension insurance also loses investment opportunities to make profits in stocks, funds and other channels.

Suitable for people: People whose main purpose is forced savings for retirement and who are relatively conservative in investment and financial management.

Participating pension insurance usually has a guaranteed predetermined interest rate, but this interest rate is slightly lower than traditional pension insurance, generally only 1.5%-2.0%.

In addition to the fixed minimum return, participating insurance also has uncertain dividends received every year.

Selling point: In addition to having an agreed minimum return, the income from this part of the funds is also linked to the operating performance of the insurance company. In theory, it can avoid or partially avoid the threat of inflation to pensions, so that pensions can relatively maintain or even increase in value.

Disadvantages: Dividends are uncertain. The amount and availability of dividends are related to the operating conditions of the insurance company. You may also suffer losses due to the company's poor operating performance.

At present, our country stipulates that insurance companies should distribute 70% of their distributable earnings to investors in the form of dividends.

However, the standardized management of insurance companies is still a problem.

Suitable for people: Those who want to ensure the minimum pension income, but are not willing to sit back and watch the storm.