I am ready to pay

The biggest feature of the personal pension system is to encourage personal savings and weaken the redistribution attribute. You can say it is more fair or unfair. .

On the one hand, individuals save their own money and are responsible for their own retirement, which is more fair from the perspective of the rich. On the other hand, the poor themselves earn less money, and now they have to think about it themselves. Regarding the matter of providing for oneself in old age, from the perspective of a poor person, he needs to be more restrained on his daily expenses so that he can be able to make a good living in his later years. Of course, having money or not is a broad concept, and everyone’s understanding is different. China has long proposed to develop a multi-level pension system, and the personal pension system is only one of the easier to implement links.

China's implementation of the personal pension system needs to solve a problem, and this will make the implementation of the personal pension system in China very troublesome.

That is, how does China solve the situation similar to the social security mismanagement and empty account operation?

We all know that Singapore has the best personal pension system in the world. The biggest feature of Singapore’s pension is the mandatory savings in personal accounts.

Singapore’s social security system covers Singapore citizens and permanent residents. The Provident Fund Law stipulates that "all salary earners, whether public or non-public employees, must participate in the Central Provident Fund scheme and pay the Provident Fund in full to the Central Provident Fund Board in accordance with regulations. Even individual traders must participate."

The Central Provident Fund stipulates that people under the age of 55 should have three accounts:

The ordinary account accounts for 72.5% and is used for home purchase, education and even personal investment.

The special account accounts for 10%, which is used to accumulate retirement funds. When you reach the age of 55, you can withdraw it in one go, but you must leave a minimum amount to protect your old age.

Medical accounts account for 17.5%, mainly used for medical expenses and medical insurance for yourself, your spouse, children, parents and grandparents (only Singapore citizens and permanent residents).

If the account levels are clear and the purpose is clear, the absolute safety and feasibility of the provident fund must be ensured. Therefore, Singapore invented a separate account management model for provident funds that is independent of government finances to ensure that provident fund funds will never be misappropriated elsewhere.

For example: The legal basis for the Provident Fund system is the Provident Fund Act. The Central Provident Fund Board of Singapore is the provident fund management agency and is affiliated with the Ministry of Labor. The government's fiscal surplus has no direct impact on the provident fund, and the government has no right to use the provident fund to make up for possible fiscal deficits.

Provident fund investment is invested and operated by the Singapore Government Investment Corporation to ensure the safety of principal and profitability.

Looking back at China, the model of social security’s combination of accounting and accounting, mixed account management, and empty account operation has always existed.

After the founding of the People's Republic of China, the "Labor Insurance Regulations" began to be revised on January 2, 1953. At that time, it was stipulated that enterprises should withdraw labor insurance funds based on total wages, and 70% of them should be managed by the enterprises themselves and used for current retirement benefits. 30% of the compensation and other benefits are handed over to the All-China Federation of Trade Unions for safekeeping as inter-enterprise coordination and reserves. Individual workers do not need to pay any fees and can enjoy other benefits such as pensions and medical care.

This system was implemented less than 20 years ago. In order to concentrate on economic construction, labor insurance premiums for state-owned enterprises were stopped in February 1969. At that time, nearly 400 million yuan of social insurance funds accumulated by the All-China Federation of Trade Unions were all transferred to the state treasury and turned into fiscal funds.

Thereafter, employee pensions will be entirely the responsibility of each enterprise. By the end of the 20th century, some state-owned enterprises were no longer responsible for their own profits and losses due to market-oriented reforms, and were even on the verge of bankruptcy, and workers were facing layoffs. Many companies are no longer able to pay pensions to their employees at this time, and employees who have retired or are about to retire can no longer receive pensions.

In order to maintain stability, the state divides employees into "old people", "middle people" and "new people". The three categories of people correspond to three different pension policies.

The pension account adopts a combination of overall account + personal account. The unified account implements pay-as-you-go, and the money paid by the "newcomers" is paid to the retired "old people" at the moment. This can solve the problem of many companies being unable to pay for the pensions of retired employees who are still waiting to be fed.

The newcomer’s personal account implements an accumulation system, and the right holder can receive it in installments when he retires. It is equivalent to forced saving.

When the reform was implemented, retired elderly people never paid pension insurance; those who had worked for a certain period of time also did not pay pension insurance before participating in the insurance. All the portion they have not paid is "deemed paid". During the reform, employees continue to participate in social security in accordance with the "deemed payment" policy.

So the "deemed payment" part is like an iceberg waiting for the Titanic to hit. The amount is huge but we can't see it.

Historical debts have been forcibly placed on the shoulders of the "newcomers" who are paying. For a long time, China's social security payment rate has been among the best in the world, surpassing many developed countries, but it has implemented low social security payment rates. Level pension replacement rate, increase revenue and reduce expenditure, to solve the transformation cost of pension reform.

But even in this way, the funds in the overall account are still not enough to pay. Therefore, under the pay-as-you-go system, personal accounts are diverted for the payment of pensions. This is the famous empty account operation problem of my country's pension insurance.

In the medical insurance reform last year, 30% of the unit's payment went into personal accounts and was confiscated into the overall account.

The personal accounts designed by social security are not strongly protected. Instead, they are often used to fill holes after problems arise in the overall account, which cannot play the role of forced savings at all.