The Actuarial Analysis On The Cost Of China's Tax Incentives For The Enterprise Annuity

In the background of China's rapidly aging population ,there are increasingly fiscal pressures coming from old-age security problem. Therefore, the development and improvement of old-age security system has become the focus of the community. Enterprise annuity, as the second pillar of pension system, has been developed over 20 years in China. During these years, China's annuity has made a certain degree of progress, but there are also many problems, such as lack of scale. From the government point of view, tax incentives is the most important tool to promote the development of annuity. It has been a popular experience that the preferential tax policy is an important engine for the development of annuity. However, China's preferential tax about the annuity is still relatively conservative, which failed to incentive enterprises and individuals, allowing only 4% -5% enterprise payment of wage payment deduct from the tax. Considering our current state of annuity, it's an urgent need that the government give more substantial benefits towards the taxation of annuity. But it's a "double-edged sword" to be more incentive. In the implementation process, it will inevitably have some negative impact. In this paper, I studied the cost of seven different preferential tax models of the annuity.First, the paper reviews the basic theory of annuity and its preferential tax. Secondly, I reviewed the 20-year's development history of annuity in China, and examined the current situation and problems of the development of China's annuity. Again, I analyzed the annuity operation procedure which including three stages——the payment, investment and reception of annuity, and the condition of preferential tax policy. Fourth, based on the previous paper, I put forward the model hypothesis and set up the model parameters. Considering the factors such as payment, inflation, wage growth rate, I established a "spread" actuarial model of seven different preferential tax policies expenditures. Fifth, I selected an SMEs of Zhu Cheng , and carried the relevant data into the model. Then, I analyzed the result from both horizontal and vertical angles in order to provide a data reference from micro-perspective level for the government to formulate preferential tax policy. Finally, I summarized the preceding analysis conclusions, and pointed out the shortcomings and future prospects for research of this study.