A Look at Interrelational Affects of Financial Gridlock, Pensions, Healthcare, and International Reactions
Posted by HCN on Friday, October 25, 2013
There are a number of financial areas that have felt the impact of
financial gridlock, markedly the one recent in October 2013, and the prospect of any large scale
financial challenge or gridlock generally, to include pensions it seems, as a sub-sector impacted. In the
past century, the US has spent considerable energy toward establishing a
fair pension system. But what were the philosophies behind the way
pensions were, in relational manner of the recent October financial
gridlock?
It is known that when a major program first rolls out, such as one for healthcare, no matter what year it is, whether in the 18th century or the 21st century, there are going to be bumps in the road as the roll out occurs, especially when compounded with the mechanism of computers, whereas millions of computers are interfacing with platforms like the World Wide Web and changing all the time.
Some are asking for the resignation of Sebelius.
See many stories published in the last few days, including: http://www.foxnews.com/politics/2013/10/24/sebelius-says-doesnt-work-for-those-calling-for-her-resignation-over-obamacare/
It is known that when something severely disastrous is potentially imminent, like financial default, or full scope gridlock, that what usually occurs is higher-ups that are knowledgeable and can pull a lot of weight are going to step up to the plate, and expose high level knowledge and strategies, as ways to bridge the gap and prevent or pull up out of the hole at the bottom of the cliff, a scenario for instance could be a funding stalemate resulting in appropriations being held back, like what transpired October 2013 here in the USA. The exposing aspect is what is being emphasized. The USA, a leading country financially and economically, is looked to as a model. One of the ever so slight flip sides to this, is when we are in trouble, we are being watched, just like when we are excelling, and there are expectations for others to follow the courses that got us there.
It may be very true, that financial strategies that countries are engaging in are entirely independent from the recent gridlock of the US, however, on a reality level, what is the chance that knowledgeable financial advisers in countries around the world completely ignored the gridlock of the US, and did not take any of the lessons learned, nor any of the pull-up strategies actuated, into consideration?
The dynamics of other countries may be different than the United States, for instance, due to geographic size, age, and population numbers, thereon, the strategies that countries take are going to be adjusted to reflect their own situation. However, studies of other models can be used for applications to get at the root of potential financial problems before they mushroom, or even altogether preclude prospective and projected self-destructive situations.
No matter which is the reality, as we must respect all nations, here is a set of article excerpts, in before, during, and after the gridlock format. A PhD thesis, or 500 page book could be typed examining the ramifications of the gridlock on international finance. Laying out here what points out, or points to some of the directions of further study:
Before the Gridlock:
The government now assumes all pension promises will come true. That’s scary.
By Jim Tankersley, Published: July 31 at 10:00 am
...The promises that aren't backed by an income stream are called unfunded liabilities, and by changing how it counts them, the government added almost $200 billion to the nation's personal savings for 2012.
The catch is, what if those promises don't come true? The accounting change was made shortly after Detroit became the largest U.S. city to file for bankruptcy, in part due to the unfunded liabilities in its pension plan, raising questions over whether pensioners will actually receive the benefits they've been promised. Signs point to more strains on state and local government pension funds down the road....
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/31/the-government-now-assumes-all-pension-promises-will-come-true-thats-scary/
Honda cuts pensions, reduces benefits
By Dan Gearino
The Columbus Dispatch Tuesday September 10, 2013 5:53 AM
Citing a need to cut costs, Honda is eliminating its pension for new employees and reducing benefits for the people already with the company.
Current employees will retain all of the benefits they have previously accumulated.
Instead of a defined-benefit pension, new employees will be offered a 401(k) savings plan, a version of which has previously been offered as a supplement to the pension. The switch will occur in January.
http://www.dispatch.com/content/stories/business/2013/09/10/honda-cuts-pensions-reduces-benefits.html
August 6, 2013, 10:56 am
Pension Reform Could Disrupt Investment Funds
By VICTOR FLEISCHER
Detroit’s financial woes, exacerbated by underfunded pension liabilities, have brought renewed scrutiny to public pension plans. Senator Orrin Hatch, Republican of Utah, and others have suggested overhauling these plans to shift more responsibility to the private sector. Private insurance companies would assume responsibility for these defined benefit plans, offering annuities to beneficiaries in exchange for employer-paid premiums.
Proponents argue that privatization could reduce the risk of municipal bankruptcy and federal bailouts. One downside is the possible increase in fees associated with external management of retirement savings; it creates another way for Wall Street to extract wealth from Main Street.
Merits aside, overhauling the public pension system would cause some interesting and presumably unintended consequences.
http://dealbook.nytimes.com/2013/08/06/pension-reform-could-disrupt-investment-funds/?_r=0
Strategy Paper for Pension Policy in Ukraine
March 2012
2.1 Financial sustainability of the 1st pillar is a major policy priority
Since independence, Ukraine has undertaken very minimal reforms of the social sector. The current most serious concern is the extraordinarily large public pension expenditures
(approximating to 16% of GDP, in 2010), which is almost twice as large as the average public pension expenditures in EU countries. Moreover, much of these funds are spent on relatively
young and healthy people, who would not be entitled to pensions in other European countries.
The PFU deficit (covered by the state budget) is forecasted to be 2.2% for 2012, having fallen significantly from 17.6% in 2011 and 26.6 in 2010.
It is the profound combination of parametric and systemic reforms of pensions that will the key to control pension expenditures over the long term.
2.7 PFU administration must show no negligence or misallocation to win trust
Limited ‘formal’ employment and reporting of receipt of minimum wages by the majority lead
generally to reduced levels of pension contributions, and these could
be a sign of lack of trust in government and its institutions.
Such mistrust is also triggered by inefficient, unreliable or nontransparent administrative routines, by low returns on pension contributions, or both, and it encourages employees into informal employment.
However, in Ukraine, it would be wrong to conclude that the informal economy stems
from the PFU administration
and an inefficient pension
design. Incentives are stacked against formal
jobs for a number of additional reasons,
and one of the main reasons for the low level of
accurate reporting of employment and wages by employers is the high rate of
employers’ social insurance contributions.
Most employers have to pay on average 40% as employers’ social insurance contributions, especially in risky occupations to fund for early retirement.
The rise of informal economy has been a serious issue in many other Central and Eastern European countries, in particular in the CIS countries, and Ukraine can draw useful lessons from the policy experiences of other similar European countries.
3. Review of international experiences of pension policy reforms
Having identified the policy goals in the previous section, the analyses included in this section will lead us to specific recommendations for policy reforms in Ukraine, drawn in the light of international experiences of pension policy reforms in the recent times (the shaded boxes are used to spell out the specific policy recommendations for Ukraine).
http://www.euro.centre.org/data/1330957218_74201.pdf
Provided in PDF is comparative chart
The following is the headline and first paragraphs of an article translated using Google translate, from German to English.
Spain plundered pension funds for purchases of government bonds
German Economic News | Posted: 4:01:13, 14:02 | Updated: 4:01:13, 16:38 | 53 comments
At least 90 percent of the total assets of the Spanish public pension fund is in Spain bonds. Fallen on hard times in states like speculating with the money of their retirees - and thus risk more than just their savings.
Aigner foods are more expensive again
Spanish PM Rajoy tried for months to delay the application of a rescue package for his country and for the Spanish government also began to unusual means. In order to keep the interest rates on Spanish bonds low, the government used the pension fund to buy Spanish bonds. And so, the Fund has invested according to official figures some 90 percent of its assets in the amount of EUR 65 billion in risky Spanish debt securities, reports the WSJ. One route, the American Treasury Secretary Geithner wants to pursue, given the financial difficulties of the USA (here).
See full article at: http://deutsche-wirtschafts-nachrichten.de/2013/01/04/spanien-pluendert-pensionsfonds-fuer-kaeufe-von-staatsanleihen/
The following is the bulk of an article translated using Google translate, from Chinese, accuracy of some of the wording is questionable, for instance, changes in pension has been proposed as evident from the content in the article; in any case, the article might be useful reading.
Pension top-level design or molding delay retirement will not change much
2013 09 06 23:22
Drop Yun Chang
Public attention the ongoing pension plan ultimately improve top-level design .
Allegedly , after a number of research institutions to submit the Ministry of Human Resources and Social pension reform program version because emphases are different, quite different, for the Ministry of Human Resources and Social finalize the impact of the top-level design is more limited . At present, the Ministry of Human Resources and Social programs have been formed , being revised and improved. Programs on the pension market , pension dual system , delay retirement, the general direction of reform will not change much .
In mid-August , Tsinghua University, published a pension top-level design, in which the delay pension age from 60 to 65 years old proposals attracted wide questioned.
Chinese Academy of Social Policy Research Centre Secretary Tang Jun believes that such programs at Tsinghua University , the country of the increasingly serious problem of unemployment on the increase. Central Institute of Political Science and Public Administration Department Director Operated concerns delay retirement at the same time lead to unemployment , but also bring some social instability.
Tsinghua University announced scheme, Chinese Academy of Social Sciences , the State Council Development Research Center , Chinese People's University, Zhejiang University and other research institutions will also be a number of their top-level design to complete pension scheme at condemns DESA .
After perfecting the top-level design program will be announced to solicit views of the community , in order to do further modifications, enhancements to the program matures, the pension reform initiatives will also be gradually implemented.
Solve the " gap"
In the top-level design Tsinghua public pension scheme, the national co-ordination of including pension , pension merged pension investment operations, delay retirement, eight aspects of the reform content , Tang Jun, told the Economic Observer reported , in addition to holding different delay retirement view , he himself Qinghua other reforms in the pension schemes are basically agree.
Tang Jun , Operated and others believe that the pension reform program Tsinghua proposed a delay retirement to 65 years... and others suggested the same proposal in mind or want to compensate by delaying retirement pension gap problem .
Tsinghua University, Employment and Social Security Research Center Director Yang Yan Sui drafting pension reform program first person in charge , she has repeatedly said in public , analyze pension gap , people can not see the Department published an annual pension balance data because Chinese individuals and co-ordinate the implementation of the management of pension systems darn , that is, the government is to present young individual accounts pension , paid in advance to have retired elderly , the result is "Although the year did not see the gap , but in fact is a big gap . "
For the dispute , experts told the Economic Observer reported that the Ministry of Human Resources and Social currently has basically completed the top-level design of the pension program development , will further revise and improve the learning part of the research institutions and experts recommendations , but the overall direction of pension reform program will not be affected .
Investment Direction
From this year, the Ministry of Human Resources and Social delay retirement External Turning the most commonly used argument is "steady careful study of whether to adjust the retirement age " on the pension market , two-track pension and other issues are silent.
Upcoming pension top-level design solutions , will reach pension market , pension dual system , delay retirement , and many other reforms , analysts said Tang Jun , eighteen Report an explicit proposal to expand the sources of financing the social security fund , the establishment of social security fund investment system to ensure safety and increase the value of the Fund , which has actually made the arrangements for the social security reform , pointing out the direction .
Tang Jun said that the current funding of the social security fund , investment operations are mainly involved in the field of pensions , pension top-level design is expected next co-ordination in the pension , pension investment operations will have greater reforms.
Wherein for pension investment operations, and the current controversial issue of pension market , Tang Jun is openly oppose pension investment stock market experts. He believes that China's stock market speculation, strong color , debt credit rating is not perfect , the temerity to take the pension there is a big risk to invest in stocks , investment failure is lost if the insured person 's life insurance money . Another angle , even NSSF to invest in stocks in the pension benefit more, also depend on the policy advantages get all bonuses earned money is small shareholders , other investors on the stock market, a serious injustice.
Examples of Tang Jun said that in 2012 , Guangdong and other places to entrust the National Social Security Fund operates 100 billion yuan of funds , investment returns more than 9 percent , higher than the national pension investment income. According to common sense analysis, the National Social Security Fund of Guangdong Social Security Fund 's investment income , pension personal accounts should be "a piece ", but explained that the National Social Security Fund , is currently operating with a rolling balance pension investment revenue generated , not should distinguish co-ordinate fund income and individual account fund income , while operating income investments should be fully included in the rolling balance fund.
Tang Jun that a long time , the state financial expenditure on old-age security too low, the reform of the pension system , in addition to continuing efforts to increase financial support , the government should then open up more stable channels for pension investment value do not blindly stare at the stock market , for example, can invest in some state-owned power stations, railway construction .
In making pension investment advice , while not without worries Tang Jun said, from public statements , the current National Social Security Fund , the Commission , the Ministry of Human Resources and Social aspects , all of the social security fund to invest in stocks supportive, expected next step pensions invest in stocks of the road will be difficult to avoid .
http://finance.sina.com.cn/china/20130906/232216691738.shtml
Pandemic of pension woes is plaguing the nation
Published: Monday, 5 Aug 2013 | 6:00 AM ET
By: John W. Schoen | CNBC.com Economics Reporter
Detroit, you're not alone.
Across the nation, cities and states are watching Detroit's largest-ever municipal bankruptcy filing with great trepidation. Years of underfunded retirement promises to public sector workers, which helped lay Detroit low, could plunge them into a similar and terrifying financial hole.
A CNBC.com analysis of more than 120 of the nation's largest state and local pension plans finds they face a wide range of burdens as their aging workforces near retirement.
http://www.cnbc.com/id/100929269
During the Gridlock:
Poland debates controversial pension reform
By MONIKA SCISLOWSKA
— Oct. 11, 2013 10:56 AM EDT
WARSAW, Poland (AP) — Poland's government opened a debate Friday on a controversial plan to transfer part of pension savings from private funds to a state account.
The government argues it would reduce risk for pension savings, but critics say the state wants the money on its books to make up for an unexpected deficit in public accounts.
Under the plan announced late Thursday, private pension funds operating within the obligatory pension system would have to transfer their government bond holdings — some 55 percent of their assets — to a state account, called ZUS, that is guaranteed by the government. The funds would be allowed to keep stocks.
Every Pole will have to decide by July whether to stick with only the state fund or have a private one, too. The decision concerns less than 3 percent of gross monthly earnings.
Prime Minister Donald Tusk's government says the state plan's guarantees will help protect the value of pensions from financial market turmoil such as that seen during the recent years' crisis.
http://bigstory.ap.org/article/poland-debates-controversial-pension-reform
After the Gridlock:
Pension Funds Aggressively Recouping Overpayments
Friday, 25 Oct 2013 08:24 AM
By Michelle Smith
Read Latest Breaking News from Newsmax.com http://www.moneynews.com/Personal-Finance/pension-sheet-metal-overpaid/2013/10/25/id/533046
Some pension funds have been overpaying pensioners for years. Now, they're on a mission to get their money back — plus interest.
A growing number of pensioners are learning that accounting mistakes can be very costly, even if you're not the one at fault. Overpayments have left some people deeply indebted while managing steep cuts to their monthly income.
http://www.moneynews.com/Personal-Finance/pension-sheet-metal-overpaid/2013/10/25/id/533046
Polish president to review constitutionality of pension reform
WARSAW | Thu Oct 17, 2013 2:59am EDT
(Reuters) - Polish President Bronislaw Komorowski said on Thursday he will review government pension reforms to ensure they are in line with the country's constitution and will benefit future pensioners.
The government plans to shift a large chunk of assets held by Poland's private pension funds to the state, a change it says will bring down public debt but which critics have called a de facto nationalization.
The president, who needs to approve new legislation, has the option of sending bills back to parliament or to the country's constitutional tribunal, a move which would slow the legislative process.
...The planned reform would allow the government more scope to borrow and spend, helping to pull the economy out of a downturn in the run-up to a series of elections starting next year.
But the plan has alarmed some in Prime Minister Donald Tusk's party, who say it could damage business confidence and alienate some pro-free market voters....
http://www.reuters.com/article/2013/10/17/us-poland-pensions-idUSBRE99G08C20131017
South Africa Government Pension Fund Suspends Principal Officer
By Janice Kew and Renee Bonorchis October 25, 2013
South Africa’s Government Employees Pension Fund, which manages more than 1 trillion rand ($101.7 billion), suspended Principal Executive Officer ...before a disciplinary inquiry relating to supplier contracts.
http://www.businessweek.com/news/2013-10-25/south-africa-government-pension-fund-suspends-principal-officer
The following is the bulk of an article translated using Google translate, from Chinese, accuracy of some of the wording is questionable; in any case, the article might be useful reading.
Liu Yun Long Tan Chinese-style pensions dilemma: the next great gap
2013-10-19 09:20
Core Tip: the pension gap numerical methods and processes and their logic , should not be a monopoly of a few researchers research , but should be public information .
Complex " pension " issue has always been a pension system reform headaches . How to change this system ? China ten years ago trying to learn Western countries introduced to the Housing Endowment system , recently raised again this proposition parties , but this is feasible ? How come after our pensions ?
Welcomed by all concerned central government departments recently held a joint multiple related pension top-level design discussion just ended, reporters interview with China making pension reform think tank , youth economists , Beijing Technology and Business University , China Life Insurance ( 13.76 , 0.06 , 0.44% ) pension asset management company , general manager Liu Yun , he said , the future is indeed a great gap , but the pension gap numerical methods and processes and their logic , should not be a monopoly of a few researchers research , but should be public information . This will give the government and people have to wear a straitjacket to solve the pension gap problem .
Chinese -style pension dilemma behind the appearance
Reporter : Chinese -style pension dilemma this concept exists, how to define ? What is its essence ? Rooted in the pension dilemma you ?
Liu Yun : I acknowledge Chinese -style pension predicament this assertion. First, it highlights the past macroeconomic policy issues for the public pension seriously neglected , and attention to solve this problem which should become the country's macro- strategic decisions. Secondly, it highlights China's current pension system is unfair , fragmented Chinese pension system is unsustainable . Third, it is more prominent reflects China 's predicament and pension service pension dilemma coexist , the current Chinese pension and pension services are equally serious shortages.
China pension and pension services is serious because the shortage is due to institutional injustice, but also because state and society has invested enough, but also because of inadequate attention to this problem nationals , a clear understanding . Overall, from policy makers to the general public , all of the Chinese demographic changes , population aging trend grossly underestimated.
Reporter : In the Chinese -style pension dilemma behind , we can see multi-track system , the so-called fragmented system , and solve the " pension multitrack " The problem is considered to be a complicated systematic project , how do you see to solve the problem complex and difficult ?
Liu Yun : If you look at history multitrack system can tolerate this problem originally , but now more and more intolerable , and reform is imperative . To solve this problem also have history, to recognize their own welfare pension system rigidity , but not as a track multitrack and not to everyone's pension benefits have become civil service pension benefits.
In the basic endowment insurance system design, you first need to study or career civil servants pension system unit with the current payment mechanism to combine to make it the ultimate beneficiaries are the same as with the rest of society . Secondly , through occupational pension , annuity and other forms, so different occupations of the population gets the appropriate pension benefits.
Reporter : Last year, the official research institute social security system in the analysis of the current Chinese social strata caused huge difference in pension benefits , I mentioned a shocking phenomenon: personnel at institutions , corporate workers, urban residents and rural residents , respectively, enjoy different pension systems and pension benefits , the same month the minimum old-age pension of only $ 200, up to $ 10,000 , a difference of 49 times . According to the Chinese People's University Institute of Gerontology , said the data released in 2010, mainland China is only about 24 % of the elderly can rely on pensioners . So, how do the new system is designed so that everyone benefits ?
Liu Yun : From this perspective , I do need a unified system , all included in the basic old-age insurance system under the framework . Gradually, in the basic old-age insurance benefits , try to achieve universal consistency . But at present, has been formed for the difference , if you want to completely eliminate , if everyone is united in the enjoyment of the same pension benefits system , this may be difficult. For the elderly, human , new three kinds of people the difference between the old-age insurance benefits , but also need to coordinate gradually the need to take the "old old methods, new approaches " approach. However, a unified basic pension insurance system is required to pay into to achieve, so the contribution rate for different groups , there will be more detailed design of the system .
"To the Housing Endowment"
Not government shirking its responsibility
Reporter : In addition to two-track problems to be resolved , China ten years ago trying to learn Western countries introduced to the Housing Endowment system , recently raised again this claim concerned , or because too much pressure on pensions , need a way to learn to be ease , but this is feasible ?
All wearing straitjacket
Reporter : " pension gap " how much ? Last year, some scholars have proposed research analysis concluded " 2013 China pension gap will reach 18.3 trillion yuan ," do you agree with this judgment ? Why such a large gap is formed ?
Liu Yun : World Bank from 1993 about China 's pension system began to focus on transition issues, and promote China's establishment of the institutional system account that pooling accounts and personal accounts system which combines , in 1997 China formally established this system . Since then, China 's pension system , pension system from the original enterprise begun to become social pension system , which is the transformation of the pension system . As for the elderly was no accumulation , the accumulation of human deficiency , leading pension hidden debt , therefore , the pension gap academic name is called the transformation of the pension system costs. Later, with the personal accounts pension funds to fill the gap , the result has emerged a new phenomenon: the personal accounts empty account .
How much of this gap ? The current version number . The World Bank calculated that account , Renmin University of China can be considered from an actuarial point of posting , Human Resources and Social Security Ministry of Social Insurance Institute also considered postings , many financial institutions have calculated that this account , but the values differ widely , it is because of their respective calculation methods and definitions are not the same. Cause for concern is that , of which there is a possibility that government-backed agencies to count this gap , easy to count small , for fear of causing social unrest and unease ; non- government-backed commercial organizations considered this gap , easy to count large, because this will cause concern and attention.
For the calculation of numerical size of the gap , we must establish an open discussion that people can computational model . For example, in the UK , similar to the calculation of pensions gap, is a group of occupation by the British Institute of Actuaries Actuaries , volunteer approach to take , and the calculation process , calculation methods and assumptions conditions ( for example: 1 . Investment in the future yield - yield design is very high , and the gap is very small ; otherwise very substantial. 2 the future aging population - the degree of thought very seriously , and the gap value will be enormous ; otherwise will be very small ) all to the public, we can see that the real focus is not a gap in the level of data , but rather targeted at several related parameter settings, so that everyone can people based on their established parameters to calculate the corresponding gap value.
Therefore, the pension gap numerical methods and processes and their logic , should not become a few researchers monopoly research, but should be public information . Moreover, it should be related to public information are: population aging index , life expectancy , pension index and so on.
This will give the government and the people have to wear a straitjacket to solve the pension gap problem .
Growth in the core pension
In the second and third pillar
Reporter : the future of our pensions come from ?
Liu Yun : Overall, there are three pillars of the current pension sources : 1. Government , individual contributions of the basic pension insurance ; 2 . Supplementary pension insurance ; 3 commercial pension insurance.
In addition, poor pension insurance provided by the government , but also by the community to provide funding. At the same time , China 's filial piety culture advocate child support for the elderly , the traditional way that we can never lose .
This is indeed a lot of pressure pensions , but most concern focused on the first pillar , the most focused on the question of how to change the first pillar was perfect, perfect after that this pillar can assume unlimited liability . This is wrong . My personal recommendation is that three pillars of the core is the second pillar , behind the need for government to tax-favored manner steadfast support through joint contributions individuals and units to carry out investment operations , which would accumulate a lot of pension assets. Then is to encourage individuals to buy commercial pension insurance . This is what I proposed structural reforms the pension system , this is a great way to go. Without a strong second and third pillars , the first pillar will be too much pressure .
My other suggestion is that the face of the first pillar of the existing gap empty account and personal account of reality , to solve this problem , there must be time window of opportunity concept. We have missed the opportunity to do real these accounts over the past decade or two , China's fiscal always have so much to do, but did a lot of wrong things , or if the early years of the pension fund accounts and solid , benefits the country would be a great thing . Now, if the first pillar accounts and solid , plus the second and third pillars of tangible capital accumulated , and then put the pension reform and open up the future of China 's financial reform , China will be able to develop a pensions represented by long-term capital . This long-term capital can just docking of China's future long-term investment , to promote China 's long-term economic growth.
Now , the public pension money will be used for bank savings , the bank put the savings into a short- term loans , long-term investment docking . Thus, on the one hand led to the banking system in the maturity mismatch , has tremendous financial risks. On the other hand , the public as a provider of long-term funds and pension did not earn this money , the money he was earning banks and other intermediaries to go . This is undesirable because it will eventually lead to total social cost of capital is too high , it is difficult to promote long-term economic growth.
How the money come from ? First , the government should afford limited liability , which is mainly concentrated in the first pillar . Second , the second and third pillar , the government should provide tax incentives and assume regulatory responsibilities pensions , businesses and individuals will have to assume greater responsibility for the future .
Reporter : through various reform initiatives that can increase the number of pensions ?
Liu Yun : I once had an account , if the government take advantage of the current favorable financial and economic environment , the first pillar account to do it, and then to develop the second and third pillars , to 2050 , China will be real assets accumulated pension up to about 79 trillion or 80 trillion yuan . At present, China's total pension assets to the end of 2012 about less than 5 trillion yuan , which includes the national balance of 2.4 trillion yuan local pension , annuity 0.5 trillion yuan , 1.1 trillion yuan of social security funds , life insurance companies pension assets should be less than 1 trillion yuan .
Huge future growth of pension accumulation values conducive to China's long-term economic growth , but also conducive to change China's financial industry is thriving banking financial structure , will greatly boost the capital market . From a financial perspective, the overall situation of China 's economic future whole will thus invigorated .
Reporter : cumulative growth up huge pension how to allocate and use ?
Liu Yun : According to my calculations, the first pillar of future asset growth is relatively small, the main body of the future asset growth in the second and third pillars , therefore, truly redistributive function of the amount of pension assets , with the downsizing of population growth , future balance value will be small.
Standing on the poor and the middle class perspective
Look to the future
Reporter: The recent pension top-level design is involved in discussions related content ?
Liu Yun : Currently we mainly concerned about the issue or the first pillar , the second and third pillar issues , although consideration, but not the point. Perhaps it is because the most basic work should do first well, doing it should be said there is some truth .
I'm with the person in charge of the Ministry of Human Resources and Social exchanges, he talked about the current standing of the poor is indeed the future perspective of the problem to be more in the future standing on the perspective of the middle class will be more future problems . I understand basically agree with him .
Of course, I personally think it is better to combine both the first pillar to solve the problem of imperfect , but also solve the problem of insufficient pensions development . Complete the pension reform and development of the two major historic mission to China across the " middle income trap" to make a unique contribution to the pension . So, it should be said , pensions great potential for future development , but the current may first pillar is to first solve the problem , then the second and third pillars of the development will be soon .
http://www.nbd.com.cn/articles/2013-10-19/780879.html
The following is the bulk of an article translated using Google translate, from Chinese, accuracy of some of the wording is questionable; in any case, the article might be useful reading.
October 16, Britain's Prince Charles called for reform of pension funds should be, conform to the trend of an aging UK population
Theme in a pension fund meeting, Charles, Prince of Wales, outlined his concerns that if the UK pensions industry can not keep up the pace of population aging, can not adapt by aging affects the environment, today's younger generation may face dire future fate.
Perhaps the Prince of Wales was intended to point out the lack of pension investment funds, but his appeal was immediately respond to the former government adviser Ros Altmann, Altmann alluding to the pension system "outdated, not for the future."
Charles urged the major beneficiaries of the pension fund to help establish a rational economic system, "the 21st century trend of the times, do not stay in the 19th century thinking." He believes this is essential to help "preserve retirement income beneficiaries."
The annual British Association of Pension Funds (National Association of Pension Funds) conference held recently in Manchester, the Prince of Wales's speech immediately recorded therein.
The Prince of Wales said: "We live in an era increasingly rising instability, we may be facing a big storm. Environmental contamination, excessive consumption of natural resources, climate change, step by step, the population is constantly expanding."
"Pension funds should even be said to have a responsibility to protect the beneficiaries of retirement from environmental, economic and social instability factors," Charles said.
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http://www.juwai.com/news49696.htm
It is known that when a major program first rolls out, such as one for healthcare, no matter what year it is, whether in the 18th century or the 21st century, there are going to be bumps in the road as the roll out occurs, especially when compounded with the mechanism of computers, whereas millions of computers are interfacing with platforms like the World Wide Web and changing all the time.
Some are asking for the resignation of Sebelius.
See many stories published in the last few days, including: http://www.foxnews.com/politics/2013/10/24/sebelius-says-doesnt-work-for-those-calling-for-her-resignation-over-obamacare/
It is known that when something severely disastrous is potentially imminent, like financial default, or full scope gridlock, that what usually occurs is higher-ups that are knowledgeable and can pull a lot of weight are going to step up to the plate, and expose high level knowledge and strategies, as ways to bridge the gap and prevent or pull up out of the hole at the bottom of the cliff, a scenario for instance could be a funding stalemate resulting in appropriations being held back, like what transpired October 2013 here in the USA. The exposing aspect is what is being emphasized. The USA, a leading country financially and economically, is looked to as a model. One of the ever so slight flip sides to this, is when we are in trouble, we are being watched, just like when we are excelling, and there are expectations for others to follow the courses that got us there.
It may be very true, that financial strategies that countries are engaging in are entirely independent from the recent gridlock of the US, however, on a reality level, what is the chance that knowledgeable financial advisers in countries around the world completely ignored the gridlock of the US, and did not take any of the lessons learned, nor any of the pull-up strategies actuated, into consideration?
The dynamics of other countries may be different than the United States, for instance, due to geographic size, age, and population numbers, thereon, the strategies that countries take are going to be adjusted to reflect their own situation. However, studies of other models can be used for applications to get at the root of potential financial problems before they mushroom, or even altogether preclude prospective and projected self-destructive situations.
No matter which is the reality, as we must respect all nations, here is a set of article excerpts, in before, during, and after the gridlock format. A PhD thesis, or 500 page book could be typed examining the ramifications of the gridlock on international finance. Laying out here what points out, or points to some of the directions of further study:
Before the Gridlock:
The government now assumes all pension promises will come true. That’s scary.
By Jim Tankersley, Published: July 31 at 10:00 am
...The promises that aren't backed by an income stream are called unfunded liabilities, and by changing how it counts them, the government added almost $200 billion to the nation's personal savings for 2012.
The catch is, what if those promises don't come true? The accounting change was made shortly after Detroit became the largest U.S. city to file for bankruptcy, in part due to the unfunded liabilities in its pension plan, raising questions over whether pensioners will actually receive the benefits they've been promised. Signs point to more strains on state and local government pension funds down the road....
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/31/the-government-now-assumes-all-pension-promises-will-come-true-thats-scary/
Honda cuts pensions, reduces benefits
By Dan Gearino
The Columbus Dispatch Tuesday September 10, 2013 5:53 AM
Citing a need to cut costs, Honda is eliminating its pension for new employees and reducing benefits for the people already with the company.
Current employees will retain all of the benefits they have previously accumulated.
Instead of a defined-benefit pension, new employees will be offered a 401(k) savings plan, a version of which has previously been offered as a supplement to the pension. The switch will occur in January.
http://www.dispatch.com/content/stories/business/2013/09/10/honda-cuts-pensions-reduces-benefits.html
August 6, 2013, 10:56 am
Pension Reform Could Disrupt Investment Funds
By VICTOR FLEISCHER
Detroit’s financial woes, exacerbated by underfunded pension liabilities, have brought renewed scrutiny to public pension plans. Senator Orrin Hatch, Republican of Utah, and others have suggested overhauling these plans to shift more responsibility to the private sector. Private insurance companies would assume responsibility for these defined benefit plans, offering annuities to beneficiaries in exchange for employer-paid premiums.
Proponents argue that privatization could reduce the risk of municipal bankruptcy and federal bailouts. One downside is the possible increase in fees associated with external management of retirement savings; it creates another way for Wall Street to extract wealth from Main Street.
Merits aside, overhauling the public pension system would cause some interesting and presumably unintended consequences.
http://dealbook.nytimes.com/2013/08/06/pension-reform-could-disrupt-investment-funds/?_r=0
Strategy Paper for Pension Policy in Ukraine
March 2012
2.1 Financial sustainability of the 1st pillar is a major policy priority
Since independence, Ukraine has undertaken very minimal reforms of the social sector. The current most serious concern is the extraordinarily large public pension expenditures
(approximating to 16% of GDP, in 2010), which is almost twice as large as the average public pension expenditures in EU countries. Moreover, much of these funds are spent on relatively
young and healthy people, who would not be entitled to pensions in other European countries.
The PFU deficit (covered by the state budget) is forecasted to be 2.2% for 2012, having fallen significantly from 17.6% in 2011 and 26.6 in 2010.
It is the profound combination of parametric and systemic reforms of pensions that will the key to control pension expenditures over the long term.
2.7 PFU administration must show no negligence or misallocation to win trust
Limited ‘formal’ employment and reporting of receipt of minimum wages by the majority lead
generally to reduced levels of pension contributions, and these could
be a sign of lack of trust in government and its institutions.
Such mistrust is also triggered by inefficient, unreliable or nontransparent administrative routines, by low returns on pension contributions, or both, and it encourages employees into informal employment.
However, in Ukraine, it would be wrong to conclude that the informal economy stems
from the PFU administration
and an inefficient pension
design. Incentives are stacked against formal
jobs for a number of additional reasons,
and one of the main reasons for the low level of
accurate reporting of employment and wages by employers is the high rate of
employers’ social insurance contributions.
Most employers have to pay on average 40% as employers’ social insurance contributions, especially in risky occupations to fund for early retirement.
The rise of informal economy has been a serious issue in many other Central and Eastern European countries, in particular in the CIS countries, and Ukraine can draw useful lessons from the policy experiences of other similar European countries.
3. Review of international experiences of pension policy reforms
Having identified the policy goals in the previous section, the analyses included in this section will lead us to specific recommendations for policy reforms in Ukraine, drawn in the light of international experiences of pension policy reforms in the recent times (the shaded boxes are used to spell out the specific policy recommendations for Ukraine).
http://www.euro.centre.org/data/1330957218_74201.pdf
Provided in PDF is comparative chart
The following is the headline and first paragraphs of an article translated using Google translate, from German to English.
Spain plundered pension funds for purchases of government bonds
German Economic News | Posted: 4:01:13, 14:02 | Updated: 4:01:13, 16:38 | 53 comments
At least 90 percent of the total assets of the Spanish public pension fund is in Spain bonds. Fallen on hard times in states like speculating with the money of their retirees - and thus risk more than just their savings.
Aigner foods are more expensive again
Spanish PM Rajoy tried for months to delay the application of a rescue package for his country and for the Spanish government also began to unusual means. In order to keep the interest rates on Spanish bonds low, the government used the pension fund to buy Spanish bonds. And so, the Fund has invested according to official figures some 90 percent of its assets in the amount of EUR 65 billion in risky Spanish debt securities, reports the WSJ. One route, the American Treasury Secretary Geithner wants to pursue, given the financial difficulties of the USA (here).
See full article at: http://deutsche-wirtschafts-nachrichten.de/2013/01/04/spanien-pluendert-pensionsfonds-fuer-kaeufe-von-staatsanleihen/
The following is the bulk of an article translated using Google translate, from Chinese, accuracy of some of the wording is questionable, for instance, changes in pension has been proposed as evident from the content in the article; in any case, the article might be useful reading.
Pension top-level design or molding delay retirement will not change much
2013 09 06 23:22
Drop Yun Chang
Public attention the ongoing pension plan ultimately improve top-level design .
Allegedly , after a number of research institutions to submit the Ministry of Human Resources and Social pension reform program version because emphases are different, quite different, for the Ministry of Human Resources and Social finalize the impact of the top-level design is more limited . At present, the Ministry of Human Resources and Social programs have been formed , being revised and improved. Programs on the pension market , pension dual system , delay retirement, the general direction of reform will not change much .
In mid-August , Tsinghua University, published a pension top-level design, in which the delay pension age from 60 to 65 years old proposals attracted wide questioned.
Chinese Academy of Social Policy Research Centre Secretary Tang Jun believes that such programs at Tsinghua University , the country of the increasingly serious problem of unemployment on the increase. Central Institute of Political Science and Public Administration Department Director Operated concerns delay retirement at the same time lead to unemployment , but also bring some social instability.
Tsinghua University announced scheme, Chinese Academy of Social Sciences , the State Council Development Research Center , Chinese People's University, Zhejiang University and other research institutions will also be a number of their top-level design to complete pension scheme at condemns DESA .
After perfecting the top-level design program will be announced to solicit views of the community , in order to do further modifications, enhancements to the program matures, the pension reform initiatives will also be gradually implemented.
Solve the " gap"
In the top-level design Tsinghua public pension scheme, the national co-ordination of including pension , pension merged pension investment operations, delay retirement, eight aspects of the reform content , Tang Jun, told the Economic Observer reported , in addition to holding different delay retirement view , he himself Qinghua other reforms in the pension schemes are basically agree.
Tang Jun , Operated and others believe that the pension reform program Tsinghua proposed a delay retirement to 65 years... and others suggested the same proposal in mind or want to compensate by delaying retirement pension gap problem .
Tsinghua University, Employment and Social Security Research Center Director Yang Yan Sui drafting pension reform program first person in charge , she has repeatedly said in public , analyze pension gap , people can not see the Department published an annual pension balance data because Chinese individuals and co-ordinate the implementation of the management of pension systems darn , that is, the government is to present young individual accounts pension , paid in advance to have retired elderly , the result is "Although the year did not see the gap , but in fact is a big gap . "
For the dispute , experts told the Economic Observer reported that the Ministry of Human Resources and Social currently has basically completed the top-level design of the pension program development , will further revise and improve the learning part of the research institutions and experts recommendations , but the overall direction of pension reform program will not be affected .
Investment Direction
From this year, the Ministry of Human Resources and Social delay retirement External Turning the most commonly used argument is "steady careful study of whether to adjust the retirement age " on the pension market , two-track pension and other issues are silent.
Upcoming pension top-level design solutions , will reach pension market , pension dual system , delay retirement , and many other reforms , analysts said Tang Jun , eighteen Report an explicit proposal to expand the sources of financing the social security fund , the establishment of social security fund investment system to ensure safety and increase the value of the Fund , which has actually made the arrangements for the social security reform , pointing out the direction .
Tang Jun said that the current funding of the social security fund , investment operations are mainly involved in the field of pensions , pension top-level design is expected next co-ordination in the pension , pension investment operations will have greater reforms.
Wherein for pension investment operations, and the current controversial issue of pension market , Tang Jun is openly oppose pension investment stock market experts. He believes that China's stock market speculation, strong color , debt credit rating is not perfect , the temerity to take the pension there is a big risk to invest in stocks , investment failure is lost if the insured person 's life insurance money . Another angle , even NSSF to invest in stocks in the pension benefit more, also depend on the policy advantages get all bonuses earned money is small shareholders , other investors on the stock market, a serious injustice.
Examples of Tang Jun said that in 2012 , Guangdong and other places to entrust the National Social Security Fund operates 100 billion yuan of funds , investment returns more than 9 percent , higher than the national pension investment income. According to common sense analysis, the National Social Security Fund of Guangdong Social Security Fund 's investment income , pension personal accounts should be "a piece ", but explained that the National Social Security Fund , is currently operating with a rolling balance pension investment revenue generated , not should distinguish co-ordinate fund income and individual account fund income , while operating income investments should be fully included in the rolling balance fund.
Tang Jun that a long time , the state financial expenditure on old-age security too low, the reform of the pension system , in addition to continuing efforts to increase financial support , the government should then open up more stable channels for pension investment value do not blindly stare at the stock market , for example, can invest in some state-owned power stations, railway construction .
In making pension investment advice , while not without worries Tang Jun said, from public statements , the current National Social Security Fund , the Commission , the Ministry of Human Resources and Social aspects , all of the social security fund to invest in stocks supportive, expected next step pensions invest in stocks of the road will be difficult to avoid .
http://finance.sina.com.cn/china/20130906/232216691738.shtml
Pandemic of pension woes is plaguing the nation
Published: Monday, 5 Aug 2013 | 6:00 AM ET
By: John W. Schoen | CNBC.com Economics Reporter
Detroit, you're not alone.
Across the nation, cities and states are watching Detroit's largest-ever municipal bankruptcy filing with great trepidation. Years of underfunded retirement promises to public sector workers, which helped lay Detroit low, could plunge them into a similar and terrifying financial hole.
A CNBC.com analysis of more than 120 of the nation's largest state and local pension plans finds they face a wide range of burdens as their aging workforces near retirement.
http://www.cnbc.com/id/100929269
During the Gridlock:
Poland debates controversial pension reform
By MONIKA SCISLOWSKA
— Oct. 11, 2013 10:56 AM EDT
WARSAW, Poland (AP) — Poland's government opened a debate Friday on a controversial plan to transfer part of pension savings from private funds to a state account.
The government argues it would reduce risk for pension savings, but critics say the state wants the money on its books to make up for an unexpected deficit in public accounts.
Under the plan announced late Thursday, private pension funds operating within the obligatory pension system would have to transfer their government bond holdings — some 55 percent of their assets — to a state account, called ZUS, that is guaranteed by the government. The funds would be allowed to keep stocks.
Every Pole will have to decide by July whether to stick with only the state fund or have a private one, too. The decision concerns less than 3 percent of gross monthly earnings.
Prime Minister Donald Tusk's government says the state plan's guarantees will help protect the value of pensions from financial market turmoil such as that seen during the recent years' crisis.
http://bigstory.ap.org/article/poland-debates-controversial-pension-reform
After the Gridlock:
Pension Funds Aggressively Recouping Overpayments
Friday, 25 Oct 2013 08:24 AM
By Michelle Smith
Read Latest Breaking News from Newsmax.com http://www.moneynews.com/Personal-Finance/pension-sheet-metal-overpaid/2013/10/25/id/533046
Some pension funds have been overpaying pensioners for years. Now, they're on a mission to get their money back — plus interest.
A growing number of pensioners are learning that accounting mistakes can be very costly, even if you're not the one at fault. Overpayments have left some people deeply indebted while managing steep cuts to their monthly income.
http://www.moneynews.com/Personal-Finance/pension-sheet-metal-overpaid/2013/10/25/id/533046
Polish president to review constitutionality of pension reform
WARSAW | Thu Oct 17, 2013 2:59am EDT
(Reuters) - Polish President Bronislaw Komorowski said on Thursday he will review government pension reforms to ensure they are in line with the country's constitution and will benefit future pensioners.
The government plans to shift a large chunk of assets held by Poland's private pension funds to the state, a change it says will bring down public debt but which critics have called a de facto nationalization.
The president, who needs to approve new legislation, has the option of sending bills back to parliament or to the country's constitutional tribunal, a move which would slow the legislative process.
...The planned reform would allow the government more scope to borrow and spend, helping to pull the economy out of a downturn in the run-up to a series of elections starting next year.
But the plan has alarmed some in Prime Minister Donald Tusk's party, who say it could damage business confidence and alienate some pro-free market voters....
http://www.reuters.com/article/2013/10/17/us-poland-pensions-idUSBRE99G08C20131017
South Africa Government Pension Fund Suspends Principal Officer
By Janice Kew and Renee Bonorchis October 25, 2013
South Africa’s Government Employees Pension Fund, which manages more than 1 trillion rand ($101.7 billion), suspended Principal Executive Officer ...before a disciplinary inquiry relating to supplier contracts.
http://www.businessweek.com/news/2013-10-25/south-africa-government-pension-fund-suspends-principal-officer
The following is the bulk of an article translated using Google translate, from Chinese, accuracy of some of the wording is questionable; in any case, the article might be useful reading.
Liu Yun Long Tan Chinese-style pensions dilemma: the next great gap
2013-10-19 09:20
Core Tip: the pension gap numerical methods and processes and their logic , should not be a monopoly of a few researchers research , but should be public information .
Complex " pension " issue has always been a pension system reform headaches . How to change this system ? China ten years ago trying to learn Western countries introduced to the Housing Endowment system , recently raised again this proposition parties , but this is feasible ? How come after our pensions ?
Welcomed by all concerned central government departments recently held a joint multiple related pension top-level design discussion just ended, reporters interview with China making pension reform think tank , youth economists , Beijing Technology and Business University , China Life Insurance ( 13.76 , 0.06 , 0.44% ) pension asset management company , general manager Liu Yun , he said , the future is indeed a great gap , but the pension gap numerical methods and processes and their logic , should not be a monopoly of a few researchers research , but should be public information . This will give the government and people have to wear a straitjacket to solve the pension gap problem .
Chinese -style pension dilemma behind the appearance
Reporter : Chinese -style pension dilemma this concept exists, how to define ? What is its essence ? Rooted in the pension dilemma you ?
Liu Yun : I acknowledge Chinese -style pension predicament this assertion. First, it highlights the past macroeconomic policy issues for the public pension seriously neglected , and attention to solve this problem which should become the country's macro- strategic decisions. Secondly, it highlights China's current pension system is unfair , fragmented Chinese pension system is unsustainable . Third, it is more prominent reflects China 's predicament and pension service pension dilemma coexist , the current Chinese pension and pension services are equally serious shortages.
China pension and pension services is serious because the shortage is due to institutional injustice, but also because state and society has invested enough, but also because of inadequate attention to this problem nationals , a clear understanding . Overall, from policy makers to the general public , all of the Chinese demographic changes , population aging trend grossly underestimated.
Reporter : In the Chinese -style pension dilemma behind , we can see multi-track system , the so-called fragmented system , and solve the " pension multitrack " The problem is considered to be a complicated systematic project , how do you see to solve the problem complex and difficult ?
Liu Yun : If you look at history multitrack system can tolerate this problem originally , but now more and more intolerable , and reform is imperative . To solve this problem also have history, to recognize their own welfare pension system rigidity , but not as a track multitrack and not to everyone's pension benefits have become civil service pension benefits.
In the basic endowment insurance system design, you first need to study or career civil servants pension system unit with the current payment mechanism to combine to make it the ultimate beneficiaries are the same as with the rest of society . Secondly , through occupational pension , annuity and other forms, so different occupations of the population gets the appropriate pension benefits.
Reporter : Last year, the official research institute social security system in the analysis of the current Chinese social strata caused huge difference in pension benefits , I mentioned a shocking phenomenon: personnel at institutions , corporate workers, urban residents and rural residents , respectively, enjoy different pension systems and pension benefits , the same month the minimum old-age pension of only $ 200, up to $ 10,000 , a difference of 49 times . According to the Chinese People's University Institute of Gerontology , said the data released in 2010, mainland China is only about 24 % of the elderly can rely on pensioners . So, how do the new system is designed so that everyone benefits ?
Liu Yun : From this perspective , I do need a unified system , all included in the basic old-age insurance system under the framework . Gradually, in the basic old-age insurance benefits , try to achieve universal consistency . But at present, has been formed for the difference , if you want to completely eliminate , if everyone is united in the enjoyment of the same pension benefits system , this may be difficult. For the elderly, human , new three kinds of people the difference between the old-age insurance benefits , but also need to coordinate gradually the need to take the "old old methods, new approaches " approach. However, a unified basic pension insurance system is required to pay into to achieve, so the contribution rate for different groups , there will be more detailed design of the system .
"To the Housing Endowment"
Not government shirking its responsibility
Reporter : In addition to two-track problems to be resolved , China ten years ago trying to learn Western countries introduced to the Housing Endowment system , recently raised again this claim concerned , or because too much pressure on pensions , need a way to learn to be ease , but this is feasible ?
All wearing straitjacket
Reporter : " pension gap " how much ? Last year, some scholars have proposed research analysis concluded " 2013 China pension gap will reach 18.3 trillion yuan ," do you agree with this judgment ? Why such a large gap is formed ?
Liu Yun : World Bank from 1993 about China 's pension system began to focus on transition issues, and promote China's establishment of the institutional system account that pooling accounts and personal accounts system which combines , in 1997 China formally established this system . Since then, China 's pension system , pension system from the original enterprise begun to become social pension system , which is the transformation of the pension system . As for the elderly was no accumulation , the accumulation of human deficiency , leading pension hidden debt , therefore , the pension gap academic name is called the transformation of the pension system costs. Later, with the personal accounts pension funds to fill the gap , the result has emerged a new phenomenon: the personal accounts empty account .
How much of this gap ? The current version number . The World Bank calculated that account , Renmin University of China can be considered from an actuarial point of posting , Human Resources and Social Security Ministry of Social Insurance Institute also considered postings , many financial institutions have calculated that this account , but the values differ widely , it is because of their respective calculation methods and definitions are not the same. Cause for concern is that , of which there is a possibility that government-backed agencies to count this gap , easy to count small , for fear of causing social unrest and unease ; non- government-backed commercial organizations considered this gap , easy to count large, because this will cause concern and attention.
For the calculation of numerical size of the gap , we must establish an open discussion that people can computational model . For example, in the UK , similar to the calculation of pensions gap, is a group of occupation by the British Institute of Actuaries Actuaries , volunteer approach to take , and the calculation process , calculation methods and assumptions conditions ( for example: 1 . Investment in the future yield - yield design is very high , and the gap is very small ; otherwise very substantial. 2 the future aging population - the degree of thought very seriously , and the gap value will be enormous ; otherwise will be very small ) all to the public, we can see that the real focus is not a gap in the level of data , but rather targeted at several related parameter settings, so that everyone can people based on their established parameters to calculate the corresponding gap value.
Therefore, the pension gap numerical methods and processes and their logic , should not become a few researchers monopoly research, but should be public information . Moreover, it should be related to public information are: population aging index , life expectancy , pension index and so on.
This will give the government and the people have to wear a straitjacket to solve the pension gap problem .
Growth in the core pension
In the second and third pillar
Reporter : the future of our pensions come from ?
Liu Yun : Overall, there are three pillars of the current pension sources : 1. Government , individual contributions of the basic pension insurance ; 2 . Supplementary pension insurance ; 3 commercial pension insurance.
In addition, poor pension insurance provided by the government , but also by the community to provide funding. At the same time , China 's filial piety culture advocate child support for the elderly , the traditional way that we can never lose .
This is indeed a lot of pressure pensions , but most concern focused on the first pillar , the most focused on the question of how to change the first pillar was perfect, perfect after that this pillar can assume unlimited liability . This is wrong . My personal recommendation is that three pillars of the core is the second pillar , behind the need for government to tax-favored manner steadfast support through joint contributions individuals and units to carry out investment operations , which would accumulate a lot of pension assets. Then is to encourage individuals to buy commercial pension insurance . This is what I proposed structural reforms the pension system , this is a great way to go. Without a strong second and third pillars , the first pillar will be too much pressure .
My other suggestion is that the face of the first pillar of the existing gap empty account and personal account of reality , to solve this problem , there must be time window of opportunity concept. We have missed the opportunity to do real these accounts over the past decade or two , China's fiscal always have so much to do, but did a lot of wrong things , or if the early years of the pension fund accounts and solid , benefits the country would be a great thing . Now, if the first pillar accounts and solid , plus the second and third pillars of tangible capital accumulated , and then put the pension reform and open up the future of China 's financial reform , China will be able to develop a pensions represented by long-term capital . This long-term capital can just docking of China's future long-term investment , to promote China 's long-term economic growth.
Now , the public pension money will be used for bank savings , the bank put the savings into a short- term loans , long-term investment docking . Thus, on the one hand led to the banking system in the maturity mismatch , has tremendous financial risks. On the other hand , the public as a provider of long-term funds and pension did not earn this money , the money he was earning banks and other intermediaries to go . This is undesirable because it will eventually lead to total social cost of capital is too high , it is difficult to promote long-term economic growth.
How the money come from ? First , the government should afford limited liability , which is mainly concentrated in the first pillar . Second , the second and third pillar , the government should provide tax incentives and assume regulatory responsibilities pensions , businesses and individuals will have to assume greater responsibility for the future .
Reporter : through various reform initiatives that can increase the number of pensions ?
Liu Yun : I once had an account , if the government take advantage of the current favorable financial and economic environment , the first pillar account to do it, and then to develop the second and third pillars , to 2050 , China will be real assets accumulated pension up to about 79 trillion or 80 trillion yuan . At present, China's total pension assets to the end of 2012 about less than 5 trillion yuan , which includes the national balance of 2.4 trillion yuan local pension , annuity 0.5 trillion yuan , 1.1 trillion yuan of social security funds , life insurance companies pension assets should be less than 1 trillion yuan .
Huge future growth of pension accumulation values conducive to China's long-term economic growth , but also conducive to change China's financial industry is thriving banking financial structure , will greatly boost the capital market . From a financial perspective, the overall situation of China 's economic future whole will thus invigorated .
Reporter : cumulative growth up huge pension how to allocate and use ?
Liu Yun : According to my calculations, the first pillar of future asset growth is relatively small, the main body of the future asset growth in the second and third pillars , therefore, truly redistributive function of the amount of pension assets , with the downsizing of population growth , future balance value will be small.
Standing on the poor and the middle class perspective
Look to the future
Reporter: The recent pension top-level design is involved in discussions related content ?
Liu Yun : Currently we mainly concerned about the issue or the first pillar , the second and third pillar issues , although consideration, but not the point. Perhaps it is because the most basic work should do first well, doing it should be said there is some truth .
I'm with the person in charge of the Ministry of Human Resources and Social exchanges, he talked about the current standing of the poor is indeed the future perspective of the problem to be more in the future standing on the perspective of the middle class will be more future problems . I understand basically agree with him .
Of course, I personally think it is better to combine both the first pillar to solve the problem of imperfect , but also solve the problem of insufficient pensions development . Complete the pension reform and development of the two major historic mission to China across the " middle income trap" to make a unique contribution to the pension . So, it should be said , pensions great potential for future development , but the current may first pillar is to first solve the problem , then the second and third pillars of the development will be soon .
http://www.nbd.com.cn/articles/2013-10-19/780879.html
The following is the bulk of an article translated using Google translate, from Chinese, accuracy of some of the wording is questionable; in any case, the article might be useful reading.
October 16, Britain's Prince Charles called for reform of pension funds should be, conform to the trend of an aging UK population
Theme in a pension fund meeting, Charles, Prince of Wales, outlined his concerns that if the UK pensions industry can not keep up the pace of population aging, can not adapt by aging affects the environment, today's younger generation may face dire future fate.
Perhaps the Prince of Wales was intended to point out the lack of pension investment funds, but his appeal was immediately respond to the former government adviser Ros Altmann, Altmann alluding to the pension system "outdated, not for the future."
Charles urged the major beneficiaries of the pension fund to help establish a rational economic system, "the 21st century trend of the times, do not stay in the 19th century thinking." He believes this is essential to help "preserve retirement income beneficiaries."
The annual British Association of Pension Funds (National Association of Pension Funds) conference held recently in Manchester, the Prince of Wales's speech immediately recorded therein.
The Prince of Wales said: "We live in an era increasingly rising instability, we may be facing a big storm. Environmental contamination, excessive consumption of natural resources, climate change, step by step, the population is constantly expanding."
"Pension funds should even be said to have a responsibility to protect the beneficiaries of retirement from environmental, economic and social instability factors," Charles said.
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