A Study On The Legal System Of The Enterprise Annuity Trust

The Grey-hairs Wave swept the whole world in the late 20th century, which caused a world-wide reformation of pension system. The World Bank put forward the pension system with three pillars, which pointed out that the optimal choice to mitigate the great pressure of payment of public pension would be the enterprise annuity, whose development had already become the major means to the problem of aging population.Since Year 2000, the tentative exploration of enterprise annuity has been being made in China, and then the management and operation of Trust Enterprise Annuity has been established, with a number of corresponding regulations and measures issued in recent years. However, due to the low level of legislation, improper relevant systems, Trust Enterprise Annuity developed slowly and imbalanced among regions and industries in China. This paper, which fully recognizes the basic reality of China, analyzes the current situation of Trust Enterprise Annuity, and puts forward some suggestions on improving China's Trust Enterprise Annuity.Besides the introduction and conclusion, this paper is divided into four parts:Partâ… :the overview of Enterprise Annuity Trust. In this part the author defines the concepts of enterprise annuity and enterprise annuity trust, and analyses the current situation and legal framework of China's enterprise annuity trust. Annuity which is essentially different from basic endowment insurance and commercial retirement insurance, is a complementary pension insurance plan designed by enterprises for their employees voluntarily based on the fact that the enterprises and their employees have participated in pension insurance. Annuity trust is an action of founding trust for the enterprise annuity and managing it as a mode of trust. China's enterprise annuity trust fund has begun to take shape in several years, but it showed a character of small scale, narrow range, and imbalance between regions and industries. China's enterprise annuity system is working with a basis of trust relationship and a supplementary of principal-agent relationship. The legal subjects involved are the principal, trustee, beneficiary, account managers, fund custodians, investment managers and other service agents.Partâ…¡:the investigations and lessons of major foreign countries'annuity trust system. In this part we set examples of the United States, Britain, Japan, Australia, then introduce the developing processes and current conditions of enterprise annuity plans of these four countries and summarize the worthy parts for China. In the study of the system from abroad, there are a few points should be our reference:attaching importance to the development process of pension legislation; emphasizing the coordinated development of three pillars of the retirement pension system which are basic endowment insurance, annuity and personal savings for retirement; using tax incentives to stimulate the development of enterprise annuity plan; making the enterprise annuity participate in the market and achieving mutual benefits of the enterprise annuity fund and the capital markets; establishing compensation mechanism for pension to prevent the risk of trust management and investment and to ensure financial security.Partâ…¢:the evolution, existing rules and problems of the legal system of China's enterprise annuity trust. China's enterprise annuity system was set up in the 20th century, late 80s and mainly went through the stage of the initial establishment of supplementary pension insurance, the stage of annuity exploration and the stage of the establishment and development of enterprise annuities. The main defects of China's enterprise annuity trust system are:the lack of the strongly support on the development of enterprise annuity trust from laws and regulations; the insufficiency of tax incentives; inexistence of special policies and supports for collective plans of SMEs; weakness in trustee position; blocks in the investment of enterprise annuity fund; shortage of investment models; flaws in information disclosure system; imperfection of regulatory system.Partâ…£:the suggestions of improving the legal system of china's enterprise annuity trust. In this part, aiming at the enterprise annuity system deficiencies of China, the author puts forward her advices of annuity trust which could perfect the legal system. In my opinion, to promote the development of the legal system of enterprise annuity trust, we should accelerate the pace of the related legislation and clear the important role of enterprise annuity system, and also provide a standardized market environment for the system's development; to encourage the enterprises and their employees to participate in corporate pension plans, the author suggests that we should enhance the tax incentives, and establish the tax system of China's enterprise annuity with aspects of the scope of incentives and processes of taxation; we should attach importance to the development of the collective plans of enterprise annuity, make more efforts to support the annuity system of SMEs, and expand the effecting range of the enterprise annuity system; we should clear the responsibility of the trustees and exploit their dominant status and supervisory role in the relations of trust law; to enhance the ability of maintaining and increasing the value of enterprise pension funds, we should vary the investing ways and products, make diversiform allocations of property and accelerate the construction of capital market; we should also improve the information disclosure system, increase the subjects of information disclosure, expand the range of the expanded disclosures and make the system more transparent in order to accept the supervision of the community; at last we should establish building a monitoring system suitable for China on the basis of the existing structure with all aspects of founding organizations of monitoring and coordinating, improving the market access system, giving regulatory responsibilities to service agencies and strengthen the risk compensation mechanisms. The innovative points of this paper are the solutions to the problems of enterprise annuity system. The author puts forward her own opinions in all aspects of improving the enterprise annuity tax system, promoting the development of SMEs'annuity schemes, building individual account investment patterns and adding information disclosure of enterprise annuity in accounting standards.