2022 Tsinghua PBCSF Global Finance Forum plenary session V “The Impact of Population-Aging on Economy and Finance” was successfully held on April 17. The forum invited leaders and experts from regulators, academia and insurance industry at home and abroad to discuss the prospects and future of China's economic and financial development under the influence of aging population.
Zhou Yanli, member of the Economic Committee of the CPPCC National Committee, former deputy secretary of the CIRC Party committee and vice chairman of the CIRC, Zheng Bingwen, member of the national committee of CPPCC and professor of School of Government of UCASS, Pan Yanhong, secretary of the Party committee and Cchairman of China Pacific Life Insurance Co., Ltd., Cheng Yonghong, secretary of the Party committee and general manager of Taiping Life Insurance Co., Ltd., Kensuke Sueyoshi, chief representative of Beijing Rep. Office, Tokio Marine&Nichido Fire Insurance Co., Ltd., attended and delivered speeches. Wei Chenyang, Associate Dean of Tsinghua University Institute for Fintech Research (THUIFR), Executive Director of China Insurance and Pension Research Center, NIFR, presided over the session.
The inauguration ceremony of the Art Finance Research Center of Tsinghua PBCSF was held at the beginning of the session. The Art Financial Research Center will focus on academic, policy and practical research in the field of art finance, building a first-class art financial research exchange and cooperation platform at home and abroad, offering advice and suggestions for the industry and promoting the practical development of the industry.
Zhou Yanli addressed in his keynote speech that, the present framework of China's multi-level social security system has basically taken shape, and the guarantee of the basic life of urban and rural residents has also benefited from the development of the national endowment insurance system. But generally, the endowment insurance system still has problems such as structural imbalance and insufficient development of the second and third pillars, which relatively relies more on the basic endowment insurance system. In recent years, the insurance industry has given full play to its functions of long-term, stability and risk management, and actively participated in the construction of multi-level endowment insurance system through various ways, including carrying out the pilot of exclusive commercial endowment insurance, launching pension financial services, exploring the pilot of pension savings products, etc. The financial supervision and regulation departments are deliberating the pilot scheme of pension savings products and will launch several pilot works moderately in due time.
Overall, our endowment insurance is now at the primary stage of development, confronting certain difficulties and problems. First, the elder generation are still holding the concept of “Raising child and precautionary saving for old age”, and the public's awareness of commercial insurance in old-age security needs improving. Second, the position of commercial endowment insurance services needs to be further clarified. Third, fiscal and tax policy support needs to be further strengthened. Fourth, the development of the commercial endowment insurance system needs to be standardized.
The insurance industry should be based on the professional advantages of insurance and actively explore the reform and development of pension financial services. In terms of top-level design, more attention should be paid to the role of the third pillar in promoting high-quality economic and social development. The orientation of the third pillar should be illuminated under the standardized development. It should flourish in coordination with the first and second pillars, and be closely connected in terms of population coverage, preferential policies and fund management. We should strengthen fiscal and tax policy support. It is considered to learn from the development experience from the United States, and to make it clear that commercial endowment insurance is a special pension financial product with long-term security function, which should be listed separately and given a higher tax deferral. Deposit, financial management, insurance, fund and other products can further enrich the choices for an individual’s old-age. We should deepen the structural reform of elderly care services.
Zheng Bingwen delivered a speech on “aging, savings rate and pension”. He said that China is facing a severe population-aging. It took only 21 years from the "aging society" to the "aged society", faster than that of developed countries and major developing countries. China's population is likely to show negative growth in 2022, possibly 10 years ahead of United Nations’ prediction. Although there is a downward trend in China's savings rate, the national savings rate and household savings rate are higher compared with developed countries, and the substitution effect of developing the third pillar on household savings rate is limited. It is time for China to develop a second and third pillar. Essentially, the third pillar is a special institutional arrangement with the nature of savings. For promoting common prosperity, the development of the third pillar is basic and inclusive, which should be arranged through institutional arrangement. The development of pensions can increase institutional investors with long-term funds and provide long-term equity capital, which will help the capital market to prosper. Meanwhile, pensions can hedge against the adverse effects of aging and contribute to economic development.
Pan Yanhong said that under the trend of aging, the market demand for pension finance and elderly care services will continue to grow. At present, China's endowment system is still dominated by basic endowment insurance, while the replacement rate of it for employees has decreased from more than 70% in 2001 to recent 40%. The affluent population is aging, and there is a strong demand in the pension financial market. The family structure has been miniaturized. The traditional concept of elderly care has gradually changed, and the demand for market-oriented elderly care services has continued to increase. Policy support is a solid guarantee for the development of pension finance at the new stage.
The insurance industry has its unique value in the supply of high-quality pension finance and elderly care services. First, relying on actuarial technology, the insurance industry can play a professional value in resisting the risk of longevity. Second, the insurance industry has long-term capital investment management experience, which can balance the multi-objective requirements of pension assets, such as duration, liquidity, income and risk. Third, the insurance industry has distinctive value in constructing the ecosystem of elderly care service industry. The customer demand has upgraded from a single insurance guarantee to a diversified demand for wealth management and senior health services. At the same time, the characteristics of insurance capital assets are consistent with the characteristics of the endowment industry's demand for social capital.
Cheng Yonghong said that the insurance industry can serve the aging population by developing insurance products such as traditional pension, tax deferred pension insurance, long-term care insurance and exclusive commercial pension insurance. When customers face a decline in income and consumption intention, insurance companies can develop products more parallel with market demand by adjusting the premium amount and payment period. In terms of elderly care services, the insurance industry should actively participate in the construction of multi-level elderly care service system, cover customers' pension needs through insurance policies, and enrich the security content through value-added services.
Sueyoshi Kensuke shared with the participants the experience and enlightenment of Japanese insurance industry in long-term care. Japan has entered the “super aged society”, where long-term care does not only increase the burden on families, but also causes profound social problems. Simultaneously, the super aged society is also confronted with the growth of patients with cognitive impairment and the aging of financial assets. The Japanese government's long-term care insurance system has developed of nearly 20 years. The main problems of the system focus on two aspects, the financial burden and insufficient fund-raising, and lack of long-term care professionals.
The referential experience of the Japanese insurance industry includes the development of long-term care related insurance products, the compensation liability for additional income of long-term care insurance, customized exclusive insurance for patients with cognitive impairment, and the implementation of family trust wealth management products, as well as promoting the “healthy operation” of enterprises.
“Creating a dynamic working environment for employees is the source of enterprise operation” as the guiding principle in Japan’s long-term care. It promotes employees' spontaneous health management from the perspective of enterprise operation, and formulates enterprise activities with corresponding strategic policies to protect employees' health. Dealing with aging is a very arduous subject. We need to manage the problem in a reasonable and perfect legal environment, through various products and services provided by enterprises, with digital technology, and the efforts of each family and the whole society.
