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Prof. Zhao Yaohui: Private Pension Schemes Offer More Than Just Nest Egg

Apr 28-2022   



The latest NSD Policy Talk centered on private pension schemes, which was recently put in the limelight as a result of a new guideline released by the State Council on April 21. Based on her years of research, Prof. Zhao Yaohui of the NSD shared with online and offline audiences her take of the challenges and solutions to the pension system.

 

The State Council guideline aims to push forward the development of private pension schemes and make them a vital supplement to the nation’s existing pension system. According to Prof. Zhao, the guideline contains three principles: firstly, private pension schemes will enjoy policy support; secondly, the schemes will be on a voluntary basis; and thirdly, they will rely on market-based operations. Therefore, the guideline explicitly defines private pensions as personal assets, though they can only be withdrawn when their owners reach certain age.

 

Prof. Zhao also pointed out that the private pension schemes are positioned as a third pillar to back up the first and second pillars, namely the basic pension program and enterprise annuities. The erection of private pension schemes will also go a long way in shaping pension and social security reforms, which have been confronted with a number of challenges, such as the lack of institutional integration on the national level, regional disparity in pension incomes and outlays, weak participation by workers in flexible employment, and unreasonable divide in the treatment for urban and rural residents.

 

Institutional choices for the pension system must be effective in addressing challenges brought on by an aging population, improving people’s enthusiasm for paying into the system, and contributing to the realization of common prosperity. If managed well, the private pension schemes will lay a solid foundation for the personal accounts in the basic pension program and bring about systemic uniformity nationwide, said Prof. Zhao, who also emphasized the need for some other auxiliary measures, including incentives, to facilitate the formation of private pension schemes.

Prof. Zhao Yaohui: Private Pension Schemes Offer More Than Just Nest Egg

Apr 28-2022   



The latest NSD Policy Talk centered on private pension schemes, which was recently put in the limelight as a result of a new guideline released by the State Council on April 21. Based on her years of research, Prof. Zhao Yaohui of the NSD shared with online and offline audiences her take of the challenges and solutions to the pension system.

 

The State Council guideline aims to push forward the development of private pension schemes and make them a vital supplement to the nation’s existing pension system. According to Prof. Zhao, the guideline contains three principles: firstly, private pension schemes will enjoy policy support; secondly, the schemes will be on a voluntary basis; and thirdly, they will rely on market-based operations. Therefore, the guideline explicitly defines private pensions as personal assets, though they can only be withdrawn when their owners reach certain age.

 

Prof. Zhao also pointed out that the private pension schemes are positioned as a third pillar to back up the first and second pillars, namely the basic pension program and enterprise annuities. The erection of private pension schemes will also go a long way in shaping pension and social security reforms, which have been confronted with a number of challenges, such as the lack of institutional integration on the national level, regional disparity in pension incomes and outlays, weak participation by workers in flexible employment, and unreasonable divide in the treatment for urban and rural residents.

 

Institutional choices for the pension system must be effective in addressing challenges brought on by an aging population, improving people’s enthusiasm for paying into the system, and contributing to the realization of common prosperity. If managed well, the private pension schemes will lay a solid foundation for the personal accounts in the basic pension program and bring about systemic uniformity nationwide, said Prof. Zhao, who also emphasized the need for some other auxiliary measures, including incentives, to facilitate the formation of private pension schemes.