Zhongxin. com, September 29th (Chief Financial Reporter Li Jinlei) The preferential tax policy for personal pension is coming.
The the State Council executive meeting held on September 26th decided that,Personal income tax concessions will be implemented for personal pensions supported by policies and operated commercially: the payer will be deducted before tax according to the annual limit of 12,000 yuan, and the investment income will not be taxed for the time being, and the actual tax burden of income will be reduced from 7.5% to 3%. The implementation of the policy dates back to January 1 this year.
What is a personal pension? Simply put, personal pension is the third pillar of China’s old-age insurance system.
The first pillar is the basic old-age insurance, and the old-age insurance for employees and urban and rural residents has covered more than 1 billion people. The second pillar is enterprise annuity and occupational annuity, which has covered more than 58 million people.
On April 21st, 2022, the Opinions of the General Office of the State Council on Promoting the Development of Individual Pension was issued. Workers who participate in the basic old-age insurance for urban workers or the basic old-age insurance for urban and rural residents in China can participate in the individual pension system.
Personal pension shall be subject to personal account system, and the payment shall be entirely borne by the participants, and shall be completely accumulated. The upper limit for participants to pay personal pension is 12,000 yuan per year.
The most direct benefit of individuals participating in the personal pension system is that they can enjoy the preferential tax policies of the state. Now, the relevant preferential tax policies are finally clear.
The annual limit of 12,000 yuan is deducted before tax.
Feng Wenmeng, director of the Research Office of the Institute of Public Administration and Human Resources of the State Council Development Research Center, told Zhongxin Finance that the clarity of tax preferential policies means that personal pensions have taken a solid step.
How to treat the upper limit of 12,000 yuan deduction?
Feng Wenmeng believes that the deduction ceiling of 12,000 yuan means that the monthly pre-tax deduction ceiling is 1000 yuan, which is more in line with the current payment status and reasonable.
He explained that on the one hand, the maximum annual pre-tax deduction is 12,000 yuan, taking into account the current economic affordability of residents and the existing actual payment status; On the other hand, it is also considered that the current pre-tax deduction has included children’s education, support for the elderly and other projects. At the same time, this quota cannot be divorced from the status quo. Too high a quota can easily lead to speculation and other risks. More importantly, it is necessary to avoid a large gap in pension levels and maintain a reasonable income distribution and security pattern.
Nie Mingjuan, director of the Department of Endowment Insurance of the Ministry of Human Resources and Social Security, pointed out at the routine briefing of the State Council in April that the initial stage is 12,000 yuan. With the economic and social development and the increase of per capita disposable income in urban and rural areas, the upper limit of payment will be gradually raised in time to better meet the people’s needs for supplementary pension.
The actual tax burden of income is reduced to 3%
According to regulations, individual pension contributions can be used to purchase financial products such as bank wealth management, savings deposits, commercial pension insurance, and Public Offering of Fund. This policy is clear, and investment income is not taxed for the time being.
In addition, the actual tax burden of income was reduced from 7.5% to 3%. Zhang Yinghua, executive researcher of the World Social Security Research Center of China Academy of Social Sciences, told Zhongxin Finance that this is the lowest tax band at present, which is conducive to encouraging the vast majority of taxpayers to participate in individual pensions. The development of personal pension and the conversion of some residents’ savings into pension assets are conducive to the smooth consumption during the personal life cycle.
7.5% is the actual tax burden of personal tax deferred commercial endowment insurance. In 2018, the Ministry of Finance and other five departments issued the "Notice on Launching the Pilot Program of Deferred Commercial Endowment Insurance for Personal Taxes", in which 25% of the commercial pension income received by individuals when they meet the prescribed conditions is tax-free, and the remaining 75% is calculated and paid at the proportional tax rate of 10%, and the tax is included in the "other income" item.
Feng Wenmeng believes that reducing the actual tax burden in the collection stage to 3% and the tax rate is relatively low, the payers will get tangible benefits, which will greatly encourage the development of personal pensions. Using tax tools to provide incentives in various links to encourage individual commercial endowment insurance to develop, can make residents’ future endowment insurance more adequate and promote the multi-pillar endowment insurance system to gradually mature.
Where can I buy it?
The preferential tax policy has come out, and many people are concerned about where they can buy personal pensions.
According to the above opinions, the Ministry of Human Resources and Social Security and the Ministry of Finance should strengthen guidance and coordination, and implement them step by step according to the actual situation, and select some cities to try out for one year first, and then gradually push them away.
Zhongxin Finance noted that the Sichuan People’s Social Welfare Department released a message in July, confirming that Chengdu was the leading city for individual pensions in Sichuan Province. In the next step, Sichuan Province will, in accordance with the relevant national arrangements and requirements, start the implementation of personal pensions in Chengdu in due course.
According to media reports, many banks and fund companies are gearing up to prepare for the pension system, and many banks have completed the four-way joint test of related systems. At present, many large and medium-sized fund companies in the industry are also involved. (End)