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The Motivation Of Enterprise Annuity Development In China

Posted on:2013-02-13Degree:DoctorType:Dissertation
Country:ChinaCandidate:H NiuFull Text:PDF
GTID:1229330395451166Subject:National Economics
Abstract/Summary:PDF Full Text Request
This research aims to explore how to promote the development of China private pension especially that of small and medium-sized private pension. Our research can be divided into four parts. The first part includes introduction and literature survey, which can provide the background information and review relative study results. The second part is mainly the content of chapter three, which analyzes our supplementary pension system and its development situation. At the same time, some key issues that needed to be solved are listed. The third part is composed with the details from chapter four to chapter eight. In this part, a discussion about how to promote the development of our private pension market has been given from the perspective of government, enterprises, employees, markets and so on. The fourth part is the conclusion part of chapter nine, giving the policy conclusions and suggestions.The first part regards aging as the breakthrough point, illustrating the theory and realistic significance of developing private pension. The existing aging population is huge, the endowment insurance system is imperfect, the enterprise’s basic endowment insurance system still bears recessive debt, and the personal account has not been impeccable. The rate of support within the regime continues to get higher, and the accounting on the cash basis cannot cope with payment risks for the running mode brought by age structure of the aging side. A large amount of literature and practical experience has shown that the development of the fully funded annuity plan is one of the most effective ways of solving the aging problems.The second part analyzes the feature of private pension system in our country, and explains the general situation of its development. We consider parts of the existing private pension system rules as the mating measures for the basic old-age insurance reform in the early stage, as well as provisional measures for considering the higher business private pension in some industries than some local enterprises. Later, the firms that developed supplementary pension are these industries converting to large-scale state-owned enterprises. This is the feature of our annuity development, but now it seems to be a shortage, which remains late starting, slowly developing, low coverage and unbalanced distribution of the market development. In this period of the pension payment of elders’heavy pressure becoming more and more manifest, private pension also needs to complete the role transform of "compensation", developing to be common and of popularization, and more small and medium-sized enterprises and their employees should participate in the establishment and development of private pension scheme.Based on the above, the third part probes in the research process we hope to dig the power of developing the supplementary pension of government, enterprises, employees, market service organization and other firms, establish effective encouragement mechanism with lower costs of system adjustment and the economy, push forward the development of private pension especially that of small and medium enterprises, and optimize our country’s pension system all through fine-tuning and optimization of the existing system based on the basic system of annuity and current unchangeable situation of firms’ operational economic environment. We believe that this power of transformation firstly comes from the adjustment of government policy. After we calculate that, the government only needs to lower the tax expenditure and then they can boost accumulation of pension fund many times. This kind of policy adding welfare of the whole society should be one of the government options. So, we propose on condition that no conflicts happened in the current tax system that annuity tax benefits system is a low cost change:to implement "step TEE" preferential Tax policy, that is the current tax system in the private pension which was conducted on the basis of fine-tuning, allowing the enterprises or individual annuities capture2%to3%tax-free of the individual account, and then ruling a certain proportional of the preferential tax provisions, which regulates upper limit of payment, prohibits overstepping strictly. Of course, in order to make full use of the aforesaid preferential tax policies, prevent widening income gap in all walks of life, avoid causing the new tax injustice,"step TEE" preferential tax policy is based on basic salary, plus the cap on the strict regulations to effectively prevent high income groups using the pension system for more preferential tax treatment of unfair behavior, which pushes the pension system to ordinary blue-and-white collar workers. According to investigation and calculation, the system of "step TEE" arrangement for the current tax threshold of the working class has a certain attraction. In the bank investment environment with very low savings interest, if the tax system accumulation pension can get better investment operations, higher yields would promote the sustainable development of the pension plans. Through the simulation analysis of chapter7, our current country private pensionfund investment stock of the upper limit of30%is based on our country’s national conditions. Strictly limited investment regulation model for the Chinese stock market is the realistic choice of all kinds of risks. With the pushing forward of China’s financial market standardization construction, the value of investment is becoming increasingly obvious, such investment portfolio can keep the value of the private pensionor improvement. Rooted in the effective financial market, through the investment, sharing the achievements of economic development will provide long-term survival and enduring power for the development of the private pension fund. The power from the market is also the most important driving force for keeping and bringing the pension when owners participate in the private pension plan activity.According to a series of researches, we make a conclusion on the fourth part:to implement "steps TEE" preferential Tax policy is the effective choice guiding the development of private pension in our country. Personal account type private pension system is less affected by the population age structure, and characterized with "self-support" for pension holders. This kind of system needs personal accounts at a duty-free treatment, otherwise it is not strange for the employee on setting up annuities to have no enthusiasm of the private pension scheme, the most extensive market has not been developed, and pension scheme development has stagnated. So the government’s guidance is the first motivation to develop pension scheme system. Only the initial motivation is under the appropriate circumstances, can we inspire the small and medium-sized enterprises and employees on demand for enterprise annuity, to form resultant force of developing supplementary pension through mobilizing the forces of government, enterprises, society, and personal, can we reserve enough annuity funds and arouse managers’ initiatives of investing and operating to build a new growth point for pension reserve, and accumulate rapidly the pension fund with the basic old-age insurance company to cope with aging pension payment pressure.
Keywords/Search Tags:private pension, system design, step "TEE"tax system, development motivation
PDF Full Text Request
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