The highly anticipated preferential tax policy for personal pension has been announced recently - the payer will be deducted before tax according to the annual limit of 12000 yuan, the investment income will not be taxed temporarily, and the actual tax burden of income received will be reduced from 7.5% to 3%. The previous executive meeting of the State Council also decided that the implementation of the policy dates back to January 1 this year. From the official announcement of the personal pension system in April this year to the gradual introduction of supporting policies, the implementation of the personal pension system is gradually approaching. What benefits will tax incentives bring? How can individuals participate in individual pension? The tax preference has been strengthened, and the incentive effect is more obvious. China's multi-level endowment insurance system mainly includes "three pillars". The first pillar is the basic old-age insurance, which is the main part and currently covers 1.04 billion people. The second pillar is the enterprise (occupational) pension. By the end of 2021, more than 70 million employees have participated in the enterprise (occupational) pension. The third pillar includes personal pension and other personal commercial pension financial businesses. The individual pension system is a supplementary pension insurance system supported by government policies, voluntarily participated by individuals and operated by the market. Among them, a direct manifestation of government policy support is tax preference. "The actual tax burden of the income received is determined to be 3%, which means that compared with the previous deferred tax commercial endowment insurance products, the tax incentives are strengthened and the incentive effect is more obvious." Lu Quan, a professor of Renmin University of China and secretary-general of China Social Security Association, said in an interview with our reporter that no matter what income class, when people reach the retirement age to receive personal pensions, they will be calculated at a tax rate of 3%, which will benefit more insured people. When residents participate in individual pension, they can add another accumulation on the basis of basic pension insurance and enterprise (occupational) pension, and they can get another income after retirement. In order to promote the construction of a multi-level old-age insurance system, China began the pilot project of tax deferred commercial old-age insurance in 2018. At present, the tax preference model of the individual pension system has also followed the relevant pilot experience. In 2018, the Ministry of Finance and other five departments issued the Notice on Carrying out the Pilot of Individual Tax Deferred Commercial Endowment Insurance, specifying the pre tax deduction of individual contributions; No tax is levied on account capital income temporarily; For individuals who receive business pensions, 25% of them will be tax-free, and the remaining 75% will be taxed at the proportional tax rate of 10%. This also means that the actual tax burden on income received is 7.5%. What is the level of 3%? By reference, according to the current personal income tax system in China, the part of wages and salaries not exceeding 5000 yuan is exempt from personal income tax, and the part of 5000-8000 yuan is exempt from personal income tax at a rate of 3%. The Caixin Securities Research Report pointed out that the actual tax burden of personal pension income decreased from 7.5% to 3%. Combined with the effect of tax deferral, it is expected to significantly increase the attractiveness of people with monthly salary of 5000-8000 yuan. "The tax policy design should give consideration to incentives and fairness. We should not only encourage more residents to participate in the personal pension system through tax incentives, but also pay attention to low and middle-income groups to prevent the system from widening the income distribution gap." Lu Quan said. CASS World Social Security
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Source：http://paper.people.com.cn/rmrbhwb/html/2022-10/25/content_25945568.htm
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