The United States is a typical three-pillar pension system, which mainly includes the first pillar federal public pension, namely the Old Age Survivors and Disable Insurance (OASDI) plan, and the second pillar occupational pension, which generally includes 401(k) plans for corporate employees, 403(b) plans for employees of nonprofit organizations, and 457 plans for government employees, third-pillar voluntary individual pensions, or Individual Retirement Accounts (IRA) plans.
From the perspective of investment income, the Federal Social Security Fund strictly invests in specific government bonds, and its yield is relatively stable. Before 2000, OASDI funds could maintain a nominal rate of return of more than 6%. After 2001, yields fell slightly, remaining around 5%. The 2008 financial crisis caused nominal yields to fall.
In the three-pillar system of the pension system in the United States, the first-pillar federal public pension plan (OASDI) occupies the basic position, covering 96% of the country’s employed population, and is the first source of living security for the elderly in the United States.
The first pillar pension is nationally coordinated at the federal government level, and is levied in the form of tax. There is room for development.
In addition, the pension fund is entrusted by the Ministry of Finance to the Social Security Fund Trust Committee for unified management and operation, and invests in tailor-made special government bonds with stable yields. Its operation is mature and standardized, and it has reference significance for my country’s basic pension reform in terms of payment, management and investment.
After 2001, the yield has remained around 5%
The governing bodies of the OASDI program are primarily the Social Security Administration and the Social Security Fund Trust Board.
The Social Security Administration is the administrative agency that implements the OASDI plan, and is responsible for the daily administrative affairs of social security; it is responsible for recording personal social security tax payments;
In the collection stage, the federal taxation department collects it in the form of social security tax, and transfers the funds to the special financial account established by the Ministry of Finance for separate storage and unified management. In the aspect of investment management, the management of the federal social security fund adopts the trust model. The Ministry of Finance acts as the fund trustee; the Social Security Fund Trust Committee acts as the fund trustee and is responsible for the management of the federal social security fund. In the payment link, the Ministry of Finance regularly transfers pensions to individual social security accounts based on the accounting information of the Social Security Administration.
The old-age insurance (OASI) and disability insurance (DI) of the US federal social security fund are both managed by the Ministry of Finance and the Federal Old-Age and Survivors Insurance Trust Fund as the trustee. investment in the fund.
The vast majority of OASDI’s funds are invested in special government bonds tailored for it. The bond is fully guaranteed by the US government. The public pension is the only investor in the bond, which is tailored to the payment needs of the pension fund according to law. date and interest rate combination. In addition, public pensions hold a very small portion of short-term bills and ordinary treasuries for liquidity reasons.
Judging from the sources of pension fund income in 2011, 70% came from taxes paid by individuals, 14% came from interest rate income, 13% came from various financial supports, and 3% came from tax incentives. Fund management expenses in 2011 were $3.486 billion.
From the perspective of investment income, the Federal Social Security Fund strictly invests in specific government bonds, and its yield is relatively stable. Before 2000, OASDI funds could maintain a nominal rate of return of more than 6%. After 2001, yields fell slightly, remaining around 5%. The 2008 financial crisis caused nominal yields to fall.
The American public pension is aimed at preventing poverty in the elderly, and the capital investment management pursues safety first, and fully invests in the country’s special national debt. This approach is not only a financial guarantee for the investment rate of return, but also a financing for the US government to form the federal government’s domestic debt. But the underlying problem is that the risks are highly concentrated in a single species, and in the context of an aging population, it will face an unsustainable financial crisis in the future. In fact, in 2013 the U.S. Treasury had to plan to raise funds to subsidize pensions by borrowing money and auctioning off some of the national debt, due to lower contribution rates. In the long run, as the baby boomers began to join the retirement army after World War II, pension expenditures have increased rapidly, and the US Federal Social Security Fund Trust Committee predicts that the US public pension plan will be unable to make ends meet by 2035.
The benefits of the OASDI plan are divided into two parts: Old Age and Survivors Insurance (OASI) and Disability Insurance (DI). OASI mainly provides benefits to retired workers and their families and workers’ survivors, while DI mainly pays benefits to disabled workers and their families. OASI’s retirement benefits take the lead in the OASDI benefits.
In 2008, the normal retirement age in the United States was 65, and those who retire at this age will receive standard pension benefits. The OASDI plan also allows early and delayed pensions. For each month of early retirement, the pension will be reduced by a certain percentage. The earliest receiving age must not be lower than 62 years old. If you retire at the age of 62, 20% of the basic pension will be deducted. If the retirement age is over 65 years old, the pension after retirement can receive 3% more each year, but it will not increase over the age of 70. U.S. law states that starting in 2000, the age for receiving a full pension will gradually increase to 67 in 2022.
Public pensions should solve the problem of value preservation and appreciation
The American public pension plan belongs to the first pillar, which corresponds to the basic pension insurance for employees in my country. The operation and management of the OASDI plan has the following implications for my country’s basic old-age insurance plan:
First, the public pension plan needs to be coordinated across the country. At the beginning of its establishment, OASDI clarified the principle of unified management and implementation by the federal government, and the law does not allow local governments to have the right to choose whether to implement the law. The theoretical basis for the above approach is that the old-age insurance plan must follow the “law of large numbers”, reflecting the functions of mutual assistance and social redistribution of public pensions. At present, my country’s basic pension insurance is still mainly coordinated at the provincial level, and the balance of funds varies greatly. Some provinces and cities have huge balances of funds, while some provinces are unable to make ends meet and rely on financial subsidies to meet the distribution of funds. In 2011, 14 provinces across the country failed to cover their expenditures, and the state financial subsidy was 227.2 billion yuan; while the current pension balance of the remaining 17 provinces and cities reached 119 billion yuan. Therefore, it is necessary to raise the level of overall planning to achieve national overall planning. In operation, individual accounts and overall accounts can be handled separately, giving priority to the realization of individual accounts, and intensifying innovation in investment management methods.
Second, the public pension balance should solve the problem of maintaining and increasing its value. At the end of 2011, the size of the US public pension was 2.67 trillion US dollars, accounting for 18% of the GDP of that year, and it was also under pressure to maintain and increase its value. Considering the long-term characteristics of pension funds, the US Treasury Department customized special bonds for them, and stipulated pension funds. Gold is the sole investor and can obtain reasonable returns on the basis of ensuring safety and liquidity. my country’s public pension balance can only be used for bank deposits and purchase of national debt. As of the end of 2011, among the 1,850.041 billion yuan of pension insurance fund balances nationwide, demand deposits, time deposits and other forms were 580.318 billion yuan, 1,177.617 billion yuan and 92.106 billion yuan respectively. Under the circumstance that the bank deposit interest rate is low and the CPI continues to be high, the risk of depreciation is extremely high. Therefore, we can refer to the experience of the United States, and on the basis of ensuring security and liquidity, we can carry out more flexible investment management of pension balances to achieve value preservation and appreciation.
Third, social insurance premiums should be changed to tax, and tax rates should be adjusted. The United States established a social security tax in the form of a federal tax, and forced the establishment of a public pension system covering all workers with the authority of the tax law. The US social security tax rate has been maintained at 12.4% for a long time. Affected by the financial crisis, in order to reduce the burden on the common people, the tax rate was reduced to 10.4% in 2011. In my country, it is collected in the form of endowment insurance premiums, which is relatively weak in compulsion and authority, which restricts the further expansion of the coverage of basic endowment insurance. The basic endowment insurance rate reaches 28%, and the burden of enterprise payment is too heavy, which affects the competitiveness of the real economy and the enthusiasm of enterprises to establish enterprise annuity plans. my country can consider changing social insurance premiums to social insurance tax, and at the same time reduce the contribution rate, enhance the competitiveness of the real economy, and also leave room for the development of the second and third pillars.
