The Establishment Of Actuarial Model And The Empirical Study On Chinese Tax-Deferred Enterprise Annuity

Enterprise Annuity (EA) is an essential component of the multi-layer pension system in our country. The Third Plenary Session of the18th CPC Central Committee attached great importance to the preferential tax policies on EA. At the end of2013, Chinese government issued a policy on the deferred tax regime on EA, a milestone in EA’s development in China. The thesis studies on the establishment of the actuarial model on the tax-deferred EA, both for Defined Benefit model (DB model) and Defined Contribution model (DC model), given the random return rate, the income growth rate, the contribution rate (CR) and the relevant probability factors. It discusses the calculation results on CR, the replacement ratio (RR) and income tax between the tax-deferred EA and the non-tax-deferred EA. It also proposes a solution for tax-deferred EA and provides advice to improve the prevailing policies.The thesis contains5chapters. Chapter1and2introduce the background and significance of the title, the domestic and foreign research on the tax treatment of EA, and the concept of EA. Chapter3shows the actuarial principles, DB model and DC model. Chapter4indicates the actuarial model of the tax-deferred EA (DB and DC model), compares tax-deferred EA and non-tax-deferred EA, and proposes a solution for EA. Chapter5analyzes RR after employees’retirement under6different situations, thus verifying the benefit of preferential tax.The innovation lies in the concept of "rational contribution rate" under DB model and "rational number of years" under DC model. These concepts result from the analysis on different tax regimes. It also has its own limitations. Actuarial model can be further studied on stochastic mortality and annuity income growth. More study could be on policy effectiveness, co-relation with pension insurance and risk control in our pension system from the perspective of EA’s preferential tax policies.