The State of China's Pension Insurance Industry

Reform of the pension system continues to deepen

China is gradually entering an aging society. Building a socialized pension system has become a very difficult and urgent task. In recent years, the pace of China's pension system reform has been moving forward. since 2011, the Chinese government has carried out a series of policy adjustments, and the pension system reform has continued to deepen:

Social security fund size is rising rapidly, and the rate of growth of pension insurance participation is stable

The national social security fund is a centralized centralized social security fund, which is mainly used to make up for the future peak of population aging. used to cover future social security needs during the peak of population aging. From 2011 to 2019, the scale of assets managed by China's social security fund has realized rapid development, increasing from 0.87 trillion yuan to 2.63 trillion yuan, with a compound annual growth rate of 13.1%.

By the end of 2020, the country's basic pension dons for 999 million people than the end of 2019, an increase of 31.28 million people, an increase of 3.2%, on the whole, from 2015 to 2020, the growth rate of the number of pension insurance participants is more stable.

The first pillar: the basic pension insurance fund growth faces multiple pressures

2011-2019, China's urban workers basic pension insurance fund income year by year, in 2019, China's urban workers basic pension insurance fund income grew to 5,206.3 billion yuan. In terms of growth rate, the growth rate of China's urban workers' basic pension insurance fund income fluctuated and rose from 2011 to 2015, but since 2016 there has been a more obvious downward trend, and the growth rate of China's urban workers' basic pension insurance fund income in 2019 was only 2.28%.

In 2020, affected by the epidemic, the country's national urban workers' basic pension insurance fund revenue of 4.4 trillion yuan, a year-on-year decline of 15.49%. It was the first negative growth in nearly 10 years.

Basic pension insurance proportion rises slowly

From 2011 to 2020, the current year's balance of the basic pension insurance for urban workers accounted for the proportion of the current year's balance of the social insurance fund has risen year by year, accounting for only 44.2% in 2011 to 51.3% in 2016. Since 2016, the proportion of pension insurance has risen slowly, with the proportion rising by only 3.7 percentage points by 2019.

Rising pressure on basic pension fund payments

In 2020, the social insurance fund for urban workers will have an income of 5.02 trillion yuan and a fund expenditure of 5.75 trillion yuan. At the end of the year, the accumulated balance of the basic pension insurance fund for urban workers was 6.13 trillion yuan. This is 0.16 trillion yuan lower than the previous year. Since the beginning of 2014, the fund's current income has been less than the treatment expenditure in the collection income.

Difficulty in basic pension insurance participation and expansion

In 2019, the number of active employees participating in the insurance accounted for 70.46% of the number of urban employment, up 1.13 percentage points from the previous year. The rate of increase has improved, respectively, up 0.73 percentage points from 2018 and down 0.63 percentage points from 2017, and the expansion remains difficult.

The second pillar: rapid development of enterprise annuities

The number of enterprise annuity participants is rising rapidly

At the end of 2019, the country's participation in the workforce of 25,479,400 people, an increase of 6.7% over the previous year. Since 2015, the growth in the number of enterprise annuity participants has almost come to a standstill, with annual growth rates in 2016 and 2017 even lower at 0.39% and 0.26%.

The introduction of the Enterprise Annuity Measures at the end of 2017 has undoubtedly provided a boost to the development of enterprise annuities, as evidenced by the year-on-year growth rate of enrollment rising to 6.5% in the first three quarters of 2020.

Enterprise Annuity Accumulated Balance Rapidly Growing

From 2012 to 2020, the scale of urban workers' basic pension insurance enterprise annuity increased year by year. in 2019, at the end of the year, there were 96,000 enterprises nationwide that had set up enterprise annuities, with a participating staff of 25.48 million people. in 2020, the cumulative balance of enterprise annuities amounted to 2.09 trillion yuan, an increase of 16.5% compared with the previous year, and the cumulative balance of enterprise annuities is growing rapidly.

Rapid growth of corporate annuity trustee management assets

According to the data released by the CBIRC, the trustee management assets of pension insurance companies increased year by year from 2008 to 2019.In 2019, the trustee management assets of corporate annuities rose by 25.5% from the same period of 2018 to reach 1,246,096,000,000 yuan. In the first three quarters of 2020, corporate pension assets under fiduciary management amounted to 146,199 million yuan, up 24.58% year-on-year

Third Pillar: Broad Prospects for Commercial Pension Insurance

In the social pension security system, the commercial pension insurance mechanism has played a key role in adapting to the future personalized pension needs, improving the mechanism of accumulating and adding value to the pension fund

From the point of view of China's life insurance company's premium income, in recent years, the scale of China's life insurance has been gradually expanding. Compared with developed countries, China's commercial pension insurance in the pension system accounted for a relatively low, such as the United States commercial pension insurance for the residents of the necessary expenses accounted for more than 35%, China's current proportion is less than 10%, far below the average level of developed countries.

In the policy support, the commercial pension insurance market is expected to usher in the spurt of development, will be the insurance industry, especially the life insurance industry to form a major benefit. At present, China's commercial pension insurance is in its infancy, the scale is relatively small, and there is more room for future development. According to the data of the CBIRC, as of the end of April 2020, *** there are 23 insurance companies participating in the pilot of individual tax deferred commercial pension insurance, 19 companies have issued a single policy, and the cumulative premium income of 300 million yuan has been realized, and the number of insured people is 47,600 people.

On the other hand, at present, China is still in the stage of rapid growth of population aging, all commercial insurance institutions should seize the opportunity to closely integrate with the situation of social and economic development, study and learn from the international beneficial experience, give full play to the innate advantages of commercial insurance in the pension industry, relying on their own efforts, through product innovation, service innovation, profitability model innovation, business model innovation, and actively capture the market opportunities, explore the customers' potential pension needs, and accelerate the development of commercial pension insurance.

For more data, please refer to China Pension Insurance Industry Market Demand Forecast and Investment Strategy Planning Analysis Report by Prospect Industry Research Institute.