Source: Wind

According to CCTV news reports, the Ministry of Human Resources and Social Security and four other departments issued a notice on the comprehensive implementation of the individual Retirement system, which will be expanded from 36 pilot cities (regions) to the entire country starting December 15.

CCTV News explains that individual pensions refer to a system supported by government policy, voluntarily participated in by individuals, operated in a market-oriented manner, and designed to supplement Retirement Insurance. Individual pensions implement a personal Account system, where contributions are entirely borne by the participants, with an annual contribution limit of 12,000 yuan. The funds contributed can be freely used by individuals to purchase financial products such as savings deposits, wealth management products, commercial pension insurance, public Funds, etc., which operate in a closed manner and enjoy tax incentives according to relevant national regulations.

More than 60 million people have already participated.

The individual pension system was officially launched on November 25, 2022, and has been piloted in 36 cities (regions) including Peking, Shanghai, Guangzhou, Xi'an, Chengdu, etc., for over two years now.

According to data from the Ministry of Human Resources and Social Security, as of the end of June this year, more than 60 million people have participated in individual pensions, nearly doubling from 30.38 million at the end of the first quarter of last year.

Data from the National Social Insurance Public Service Platform shows that there are currently 857 personal pension products available for participants to choose from. Among them, there are 466 savings products, 200 fund products, 165 insurance products, and 26 wealth management products.

Institution interpretation: Bullish for Capital Markets.

Several chief analysts from brokerages believe that the implementation of the personal pension system will bring long-term stable Inflow to the stock market, helping to enhance market stability and the proportion of Institutional investors, thereby promoting the high-quality development of Capital Markets.

According to the Chief Economist of CITIC SEC, Mingming, the personal pension system is expected to promote the development of the third pillar, thereby enhancing the balance of the three pillars of retirement and improving China's retirement savings. He expects that as future policies are gradually refined, referencing the USA.Mutual Fund.Nearly 50% of the funds come from pensions; from a long-term perspective, the incremental funds brought to the capital markets by personal pensions will reach trillions.

Li Qiusuo, Strategy Analyst and Managing Director of the Research Department at China International Capital Corporation, believes that developing the personal pension system will help accelerate the shift of Chinese residents' Asset allocation from real estate and deposits to financial assets, bringing new types of long-term funds to Capital Markets. Furthermore, since pensions inherently possess long-term fund attributes, they help establish an investment style that pursues long-term stable returns, fostering value investment and long-term investment concepts in Capital Markets, reducing market volatility, aiding the high-quality development of Capital Markets, and better serving the real economy.

Institutions estimate that by 2031, the scale of individual pensions entering the market in China could exceed 500 billion, and if 30% of the third pillar is allowed to invest in the market, this scale is expected to be achieved.

Gao Chao, Chief of Non-Banking at KainSource Securities, believes that the top-level design plan for personal pensions basically meets market expectations. In the long run, the personal pension system will strengthen the long-term logic of wealth management, with leading companies on both the channel and product sides benefiting more significantly.

Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, stated that the implementation of the personal pension system helps to attract long-term and stable "inflow" to the Capital Markets, enhancing the stability of the Capital Markets.

UBS Group Analyst Cao Haifeng mentioned in his Research Reports that personal Retirement Accounts will gradually accumulate before 2060 and will reach a balance of income and expenditure around 2060, at which point the cumulative scale of personal Retirement will reach 131-219 trillion yuan, accounting for approximately 28.3%-47.0% of GDP; this will bring 453.7 to 985 billion yuan in revenue to the Huaan CSI All Share Investment Banking & industry, accounting for 16.0% to 34.8% of the total revenue in the industry.

Editor/Rocky