The Study On Implementing The Tax-deferred Pension Insurance In China

With the rapid development of Chinese economy and society, the aging population has become an increasingly obvious social phenomenon in recent years. China is one of the few countries with faster development speed in the ageing population. According to statistics, the percentage of the population aged60has raised from11.03%in2005to13.7%in2011.The aging population has exerted great pressure on our pension insurance. How to improve the country’s pension insurance system, and how to solve the pension problem of public have always been the focus of nation.China has initially established the pension system with three pillars:the basic social pension insurance as the first pillar, the enterprise annuity as the second backbone, and individual commercial pension insurance as the third pillar. However, the the basic social pension insurance has a series of problems at present, such as the falloff in its substitution rate, the empty account, as well as its narrow coverage. The enterprise annuity is also problematic for its uneven distribution industry, imperfect system, small tax incentives, so it does not play its due role. Moreover, people are still lack of recognition of the importance of individual commercial pension insurance, so the development of individual commercial pension insurance has been slow, but it still has great potential.The16th article of ((Several opinions proposed by the state council general office about how the current finance promote economic development)) of December2008mentioned that it is necessary to develop individual and group pension insurance business, encourage and support the capable enterprises to establish a multi-level pension security plan by the commercial insurance, as well as research on tax incentives such as making the pension insurance policy holders tax-deferred.In a speech in the national life insurance supervision work conference in February2010, chairman assistant Wenhui Chen mentioned that we should actively promote Shanghai to carry out the pilot. The tax-deferred pension insurance provides a new endowment mode for us, and effectively promotes the development of commercial pension insurance. Meanwhile it can also reduce the over-reliance on the current basic pension security, as well as perfect the pension insurance system construction of our country in order to establish a multi-level social security safety net.This paper emphasizes the importance of establishing the three pillar pension system, introduces the pension insurance system reform experience in foreign country, points out that it is necessary to develop the tax-deferred pension insurance. Then the paper takes for example that shanghai carrying out the tax-deferred pension insurance pilot, analyses the tax expenditure. Finally the paper analyses at present stage the obstacles in the development of tax-deferred pension insurance and put forward the corresponding solution.The first part of this paper is introduction and mainly introduces the background and meaning of the research, domestic and foreign literature review, research method, elaborates the research framework of the article, innovation and deficiency, this is the beginning of the paper.The second part firstly introduces the related concepts of individual savings based pension insurance, current situation and the related concepts of the tax-deferred pension insurance, the policy documents on the development of tax-deferred pension insurance in China. And then analyzes the tax incentives between tax-deferred pension insurance and non tax-deferred pension insurance, and points out that mode of EET has the largest tax incentive.The third part introduces the successful experience in foreign countries where the tax-deferred pension insurance is carried out. This includes Australia,401(K) plans and IRA plans in United States, pension insurance reform in Germany and Japan.The fourth part analyzes the necessity and cost-benefit of tax-deferred pension insurance. First the paper analyzes the specific problems of basic social pension insurance and enterprise annuity, pointing out that it is necessary to develop the individual commercial pension insurance. Next, take for example shanghai carrying out the tax-deferred pension insurance, and forecast the tax expenditures when the policy is implemented and it is beneficial for individuals, insurance companies and state.The fifth part introduces at present stage the obstacles in the development of tax-deferred pension insurance and puts forward the corresponding solutions.