Measures related to social security fee reductions have been put into effect, reducing the burden of contributions by more than 300 billion yuan for the whole year.

Title: Basic pension adjustment regulated by law

● From May 1 this year, measures related to the reduction of social security fees officially came into effect. Among them, the basic pension insurance for urban workers (including enterprise and institutional pension insurance) unit contribution ratio higher than 16% of the provinces can be reduced to 16%

● After the reduction of social security premiums, the hands of the pension can still be guaranteed? The government work report made it clear that this year will continue to modestly increase the basic pension of retirees. Since 2005, since the beginning of the increase in the basic pensions of retirees, retiree pensions have risen for 15 years, to improve the lives of corporate retirees and promote social equity has played an important role

● At present, China has developed a series of active, comprehensive and scientific response measures, fully able to ensure that pensions are paid in full and on time for a long period of time. The pension benefit adjustment mechanism will eventually need to be incorporated into the social insurance law or related regulations to ensure that benefit adjustments are legalized and to stabilize the expectations of retirees

By Zhao Li

By Dong Jiaying

Social security premiums have a bearing on the burden on enterprises and the public's immediate interests. According to the Comprehensive Program for Reducing Social Insurance Premium Rates (hereinafter referred to as the Program) issued by the General Office of the State Council, the measures related to the reduction of social insurance premiums officially came into effect on May 1 this year.

It is reported that the adjustment not only reduces the proportion of unit contributions for basic pension insurance for urban workers (including basic pension insurance for enterprises and institutions, hereinafter referred to as pension insurance), but also puts forward a number of policies, such as adjusting the base amount of social security contributions, accelerating the promotion of provincial-level coordination of pension insurance, and increasing the proportion of centralized transfers from the pension insurance fund. With the Program in place, it is expected to reduce the burden of social security contributions by more than 300 billion yuan for the entire year of 2019, according to official data released.

Why has lowering the pension insurance premium rate become a key initiative? Will pension increases slow down in the future? Will the basic pension insurance fund exhaust its accumulated balance? Will the pension treatment adjustment mechanism be legalized? For this social security fee reduction after the official landing of the public generally concerned about the four major issues, "Legal Daily" reporter interviewed experts in the industry.

Pension insurance premium rate down

Enterprise burden reduction effect is obvious

Since 2015, China has reduced or phased down social security premium rates for five times, involving basic pension insurance for enterprise employees, unemployment insurance, industrial injury insurance and maternity insurance. According to officially released data, it is expected that from 2015 to April 30 this year, the current phased reduction of fee rate policy implementation period expires,*** can reduce the burden of enterprise social security contributions of nearly 500 billion yuan.

Last November, the State Council issued "on doing a good job in the current and future period of work to promote employment of a number of opinions", in support of the stable development of enterprises, to encourage employment and entrepreneurship, and actively implement the training, timely implementation of laid-off unemployed people to help the introduction of targeted policy measures, playing the promotion of employment "combined fist", which will reduce the fee rate with the stabilization of employment and the implementation of the current phased reduction policy. The rate of reduction will be linked to the stabilization of employment.

Since January this year, the ministry level is also a number of public statements will be reduced social security rates:

January 11, Minister of Finance Liu Kun said in an interview with the media, is actively studying the development of market concerns to reduce the social insurance rate of a comprehensive program to further reduce the burden of corporate social insurance contributions.

On Jan. 13, Zhang Jinan, minister of human resources and social security, said he would work with relevant departments to accelerate research on the implementation plan for enterprises to reduce social insurance premium rates.

On Jan. 15, Xu Hongcai, assistant minister of finance, told a news conference at the State Council Information Office on the implementation of the spirit of the Central Economic Work Conference that the Ministry of Finance, in cooperation with relevant departments, is actively studying and formulating a comprehensive plan to reduce the rate of social insurance premiums, so as to further alleviate the burden of social insurance contributions on enterprises. Meanwhile, it is cleaning up and standardizing fees and increasing efforts to investigate and deal with arbitrary fees.

Compared with the past, the social insurance fee reduction proposed in this year's Program is obviously more vigorous. Vice Minister of Human Resources and Social Security You Jun in the State Council on April 4 this year, the State Council's regular policy briefing explained that the introduction of the "program" to directly reduce social security fee rates are mainly two measures: First, reduce the proportion of unit contributions for pension insurance. From May 1, the basic pension insurance for urban workers (including pension insurance for enterprises and institutions) can be reduced to 16% in provinces where the unit contribution ratio is higher than 16%. Secondly, the current policy of phased reduction of unemployment insurance and industrial injury insurance premium rate is extended for one year to April 30, 2020, which means that the unemployment insurance will continue to implement a total rate of 1%, and the rate of industrial injury insurance will continue to be lowered in accordance with the accumulated balance of the fund in each region.

According to You Jun, in these two measures, the key initiative is the pension insurance unit contribution ratio reduction is relatively large, enterprises are very concerned about this.

"The issue of fee reduction has long been discussed. In the past, the system implemented a nominal rate, the actual contribution rate is how much, we have done a calculation, found that the situation in the provinces varies greatly. A basic conclusion is that the more economically developed places have lower rates, while the less economically developed places have higher rates. According to the combination of social wage and fund income, the national average is about 16%, which is a basic judgment." Renmin University of China professor Han Keqing analyzed to the Legal Daily reporter.

In response to these fee reduction measures, some media reports pointed out that this policy is universal, all enterprises can enjoy, and it is not a phased policy, but a long-term institutional arrangement, which allows enterprises to have a more stable long-term expectation of the future effects of the burden reduction.

The reason for this long-term institutional arrangement, Han Keqing believes that one purpose is to reduce the cost and burden of labor for enterprises (especially small and medium-sized enterprises), "In fact, as early as a few years ago, Premier Li Keqiang put forward a phased reduction in the social insurance premium rate at the State Council executive meeting, but this year's strength is unprecedented. As for the arrangement of the so-called small insurance for industrial injury insurance and unemployment insurance, it is also an ongoing initiative."

Pensions have risen for 15 years

The increase has slowed

It is worth noting that since the State Council's decision to raise the basic pensions of retired people from 2005, the pensions of retired people have risen for 15 years in a row so far.

In this regard, Cheng Jie, an associate researcher at the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, believes that for nearly 100 million retirees, the basic pension level for 15 consecutive years of upward adjustment is of course a good thing, after all, the pension treatment adjustment is an important way for retirees to **** enjoy economic development.

Lu Quan, secretary-general of the Chinese Society of Social Security and associate professor at Renmin University of China's School of Labor and Human Resources, similarly argued that the 15 consecutive years of upward adjustments to basic pensions have played an important role in improving the lives of corporate retirees and promoting social equity.

Some people are worried about whether the pension in hand after this social security fee reduction can still be guaranteed. In response to this public doubt, Zhang Jinan, Minister of Human Resources and Social Security, replied during this year's two sessions, "We can clearly tell you that we have the ability to ensure that pensions are paid in full and on time. The government work report also made it clear that this year will also continue to moderately increase the basic pensions of retirees."

In fact, this year, another increase in corporate retiree pensions has been signaled previously. As early as January this year, at a press conference held by the State Council Information Office, Qiu Xiaoping, vice minister of human resources and social security, said that in 2018, the accumulated balance of the national employees' basic pension insurance fund was nearly 5 trillion yuan, the scale is still sizable, with a strong support capacity.

But it is worth noting that a media investigation has found that pension increases have slowed since 2016.

Chinese pension finance 50 people forum core members, Wuhan University of Science and Technology, director of the Institute of Financial Securities, Dong Dengxin said in an interview with the media, in order to alleviate the pressure on the income and expenditure of the pension fund, the growth rate of pensions in the future should also be slowly slowed down, with the rate of increase of the CPI, pensions increased by 10 percent per annum, in the future is unlikely to recur, and even to maintain the last two or three years, the annual increase in pensions of 5 percent The difficulty is also very big. In the future, the level of annual pension growth at 2%, 3%, may be the norm.

In this regard, Han Keqing believes that: "This is not good to judge, because the pension adjustment is affected by many factors and constraints, as for the slowdown or growth, need to be based on the actual situation from the macro level of comprehensive judgment."

"In the beginning, the growth rate was 10 percent because our pensions had not been adjusted in the previous 10 years, but prices were rising. Until 2016, the growth rate began to slow down, and now pensions are raised at a rate roughly equivalent to the rate of price increases, and I don't think it will go any lower." In the interview, Tang Jun, a researcher at the Social Policy Research Center of the Chinese Academy of Social Sciences, said in an analysis.

Social security fund balance is not much

Official response need not worry

A recent report by the World Social Security Research Center of the Chinese Academy of Social Sciences predicted that the national basic pension insurance fund for urban enterprise workers will exhaust its accumulated balance by 2035.

Meanwhile, the Green Paper on Social Security: China's Social Security Development Report (2019) argues that "China has never established a normal pension adjustment mechanism, and although the pension system has different attributes, it implements uniform adjustment. In the future, as newcomers gradually move into retirement, the pressure on payment of benefits will gradually increase", coupled with the lack of a corresponding longevity risk resolution mechanism within the system, if no reform is carried out, the risk of fund payment will build up in the future. China's current adjustment method lacks consideration of the fund's long-term sustainability and ignores the cost burden of an aging population in the future.

"What the report says may be true, but it is problematic to judge the size of the pension system's risk based on that fact alone. That's because it's based purely on actuarial calculations, and actuarial calculations are related to insurance, but social insurance is not insurance; social insurance uses a form of insurance. Social insurance is a national system, actuarial calculations are necessary, but not the only criterion." Tang Jun analyzed that insurance and social insurance is not the same, the subject of insurance is a determined amount, without taking into account the factor of price increases; social insurance is to protect the basic life, the basic standard of living is to be adjusted with the price increases, is not a fixed number, "so the actuarial can only be used as a reference to social insurance, because there are a lot of uncertain factors In fact, actuarial calculations can not be made."

Tang Jun added that the development trend of social insurance in the world shows that it is not enough to consider how much money is collected and how much is paid out. In most countries, pension insurance adopts a pay-as-you-go approach, so savings are not taken into account, "I will collect as much money as I expect to need to pay out this year, so basically the income and expenditure is more than enough".

On April 23, Nie Mingjun, director of the Department of Pension Insurance at the Ministry of Human Resources and Social Security, responded that China has formulated a series of positive, comprehensive and scientific countermeasures, which are fully capable of guaranteeing that pensions will be paid in full and on time in the long term.

In an interview with Legal Daily, Han Keqing also disagreed with the judgment that the accumulated balance will be exhausted. "Because the pension insurance system, in addition to self-balancing and self-running, the reason why it is called social insurance, there is also a kind of state responsibility in it, and to be more specific, it is the factor of state financial subsidies." Han Keqing said.

"The purpose of our fee reduction is to make the system better, including improving the collection system of social insurance, strengthening the collection, promoting national coordination, so that the social insurance fund has more balance, and then maximize the function of social insurance self-balancing and self-running." Han Keqing believes that even including some of the subsequent top-level design, the purpose is to make the pension insurance system more sustainable and fairer, so that the existing system will go longer, "I think that this series of supporting systems are closely linked together, including the issue of making a solid contribution base, and the social insurance tax levy that was passed by the State Council last year, although the rate has been lowered, but the Social insurance fund revenue does not necessarily mean that it will be reduced."

Establishment of pension adjustment mechanism

Expectation of the inclusion of social insurance law

In fact, as early as 2005, the State Council announced the "decision to improve the basic pension insurance system for enterprise employees," the requirement to "establish the normal adjustment mechanism for basic pensions".

When the State Council held an executive meeting at the end of July 2007, it emphasized the need to establish and improve the normal adjustment mechanism for basic pensions, and to actively develop enterprise annuities and commercial insurance, so as to form a long-term mechanism for improving the overall level of pension insurance benefits for retired enterprises.

In October 2010, the Standing Committee of the National People's Congress (NPC) considered and passed the Social Insurance Law, the first comprehensive law on social insurance in China, but unfortunately, it did not provide for a normal adjustment mechanism for the basic pensions of enterprise retirees.

Eight years later, the normal adjustment mechanism for basic pensions began to be established.

In March 2018, the Ministry of Human Resources and Social Security and the Ministry of Finance issued the Guiding Opinions on the Establishment of a Normal Adjustment Mechanism for the Determination of Basic Urban and Rural Residents' Pension Benefits and Basic Pension, making it clear that in the future retiree pensions will be adjusted in due course each year according to the rise in employee wages and changes in prices.

However, Cheng Jie believes that these are not enough, and that the pension treatment adjustment mechanism ultimately needs to be incorporated into the social insurance law or related regulations to ensure that the treatment adjustment is legalized and to stabilize the expectations of retirees, and that "the pension adjustment mechanism, which is in line with the economic and social development of our country, needs to be a gradual process of maturity and perfection."

"The social insurance law does not seem to have to be reworked yet, but social insurance should be raised along with prices and people's living standards, which is what we are currently doing. I agree that the pension treatment adjustment mechanism should be incorporated into the social insurance law." Tang Jun said, at present, improve the establishment of China's pension adjustment mechanism to do the following three points, first, do not scare the people, because you can not rely solely on savings to solve the funding problem; second, to open up new sources of funding, relying on the unit and individual contributions is certainly not enough; third, social insurance, especially pension insurance, the basic goal is not to send how much money a month, but to protect the basic life, and therefore must be adjusted.

"It is best to have a relatively clear and reasonable adjustment method, so that everyone has a stable expectation. We see that there is information abroad, including how much you contribute each year and how much pension you will receive after retirement, there is a very clear calculation of the figures." Han Keqing said, for example, such as "how old I participate in the insurance to pay how much money, to how many years after retirement can receive how much money, everyone has a number in mind, for the individual's motivation to contribute or for the operation of the entire system is a positive factor."

"Now we may still be constrained by a number of factors, there is no way to do so detailed, but as far as possible to let the people have a clear expectation, should be the development of the system a basic direction." Han Keqing said.

On how to establish a pension adjustment mechanism in line with China's economic and social development, Han Keqing believes: "The first thing is whether our system can work well, which is a basic prerequisite. The initial goal of the system design is to try to achieve a self-balancing and self-running system, no matter whether the pension benefits are measured according to DB or DC, without forgetting the initial goal, the system's own treatment commitment is the main body. Coupled with the factors of financial subsidies and economic changes, reference to some other policy standards for the development and adjustment of methods, associated with the level of economic development, the level of income of residents, in this way, the development and adjustment of pensions will be more reasonable."