Deputy Director Yu Hong of Our Institute Accepted Interview by “China Financial and Economic News” on the Issue of Unified National Management of Endowment Insurance

The Ministry of Human Resources and Social Security recently introduced that the unified national management of basic endowment insurance of enterprise employees has been formally implemented since January 1^st of this year. The implementation of the unified national management of basic endowment insurance is helpful for realization of fair treatment of endowment insurance, for solving the structural conflict of the endowment insurance fund on systematic level, and it symbolized that China has made a solid step towards an old-age security that is of higher quality, more efficiency, more fairness and more sustainability.

Deputy Director Yu Hong of our Institute accepted interview by reporter of the “China Financial and Economic News” on the issue of unified national management of endowment insurance, and expressed that unified national management of endowment insurance is the inevitable course for construction of a fair and sustainable endowment insurance system.

“From the income and expenditure situation of endowment insurance in these years, due to the different demographic structures and different economic structures in different regions of China, there are quite big differences in the operating status of basic endowment insurance funds in different provinces, particularly in provinces like Liaoning and Heilongjiang, the fund operation faces great pressure, and such unbalanced situation in different regions tends to intensify.” Yu Hong indicated, under such a circumstance, the implementation of unified national management of basic endowment insurance means adjustment of the current surplus and deficit of endowment insurance funds among different regions, ensuring timely and sufficient disbursement of pensions in different regions, which is helpful in relieving the structural conflicts of funds on systematic level, and enabling the disbursement of pensions in difficult regions to be more guaranteed.

Yu Hong believes that the total amount of endowment insurance funds in China is relatively abundant, currently the rolling balance of social security funds across China is RMB 4.8 trillion, which is enough to pay over 14 months of pensions, the income is still higher than expenditure, and it’s able to support the smooth implementation of unified national management of endowment fund. In recent years, China has continuously made a series of policy arrangements, including enlarging the efforts of fiscal subsidies by the Central Government, establishment of the central adjustment fund system of endowment insurance, etc.” Under support by these conditions, promoting the unified national management of endowment insurance at proper time will be a very good choice.” She said.

Yu Hong told the reporter that after the implementation of the central adjustment system of endowment insurance fund, the balances can be adjusted and the risks can be shared across China, the implementation of endowment insurance system in different provinces will be more unified. However, she stressed that “This system is a transitional policy. In order to form a relatively reasonable expenditure responsibility sharing mechanism between central government and local governments on systematic level, ‘Transfer of Power” at proper time and implementation of unified national management will be an inevitable choice.”

   From Yu Hong’s perspective, as for the reform of unified national management of endowment insurance, the key to a relatively reasonable division mechanism of financial governance and expenditure responsibility between the central government and local governments is to solve the concerns of related regions while protecting their initiatives. “In other words, under the precondition of realizing unified national management, it’s necessary to properly preserve the related incentive policies in the provinces where income is higher than expenditure. Meanwhile, it’s necessary to reduce the reliance of the provinces where income is less than expenditure on the finance of Central Government, and promote them to actively solve the income-expenditure gap problem facing them.” Yu Hong said. “The implementation of unified national management of endowment insurance will need a process, during the transition period, the implementation of various policies would not be simply one-size-fits-all approach’. It should be recognized that the simultaneous implementation of whole range of reforms in the aspects of collection and management of endowment insurance is very necessary.” Yu Hong indicated, in the collection end, the policy of collecting social security premiums from enterprises by taxation authorities has been implemented across China, which is to ensure the realization of collecting all the collectibles under the systematic framework of endowment insurance; in the management aspect, the competent authorities shall continuously explore the diversified investment and value-increasing channels of endowment insurance fund, and further strengthen the sustainability of funds.