Yu Hong, Deputy Dean, Accepted the Interview of China Financial & Economic News

Premier Li Keqiang presided over an executive meeting of the State Councilon Dec. 9th, 2020, and pointed out that commercial life insurancehas reached a certain coverage on a nationwide scale in recent years, but thereare problems such as insufficient supply of insurance products and low level ofguarantee, thus we shall speed up the development of commercial healthinsurance, and accelerate the construction of incorporating commercialendowment insurance into the third pillar of endowment insurance in accordancewith the unified norms and requirements at the same time.

Yu Hong, deputy dean of China Public Finance Institute, accepted theinterview of China Financial & EconomicNews on Accelerating the Construction of the Third Pillar of EndowmentInsurance. Personal insurance is an important part of commercialinsurance. Compared with the international level, this part of market in China isrelatively small, which is single in variety and limited in coverage. Inher point of view, in the context of the 14th Five-YearPlan, which clearly stated that the multi-level social security systemshould be improved, the statement of promoting the expansion, quality andsteady development of personal insurance sent out two positive signals, onthe one hand, the deployment of relevant initiatives is conducive to the steadydevelopment of China's social security system, as well as copying with the possiblechallenges that the social security system may face in terms of sustainabledevelopment in the future; on the other hand, this is also a big move to deepenthe reform of the financial sector, which will be conductive to makingcommercial insurance play its important role as a financial instrument andfurther provide people with diversified social security options to meet theirdiversified needs.

Yu Hong pointed out that China has currently formed two basic platforms ofendowment insurance system, Urban Workers + Urban and Rural Residents,which means that the first pillar of endowment insurance ---- basic endowmentinsurance system that takes government as the main provider has beenestablished.After the first pillar is established and perfected, we shallgive full consideration to the role that enterprises and individuals can playin the main body of provision of social security. She analyzed that, seeingfrom the international experience, a complete endowment insurance system is inevitableto realize the shared responsibility of government, employer and individual; asthe second pillar of endowment insurance, the enterprise annuity andoccupational annuity that take the enterprise as the main body of provisionshall be further improved; individual commercial endowment insurance, as thethird pillar of endowment insurance, is an important manifestation of sharingendowment responsibilities of the individuals, which can effectively guideindividuals to assume their responsibilities in endowment activities throughpreventive endowment savings and investments.

For some flexible workers without employers, they need to pay the securitypart that originally shall be borne by the employers, and many of them maychoose to pay the lowest endowment insurance, which may result in a relativelysmall accumulated amount of the pension accounts.In the opinion of Yu Hong,if the commercial insurance can provide the flexible workers with a relatively clearpayment structure and term designs that accord with their characteristics, the commercialendowment insurance, as the third pillar, can play a greater role when theycannot enjoy the guarantee of rights and interests of the first pillar andsecond pillar of the endowment insurance due to the reasons such as the limitationof identity, insufficient payment amount and insufficient payment periods.