1) Occupational annuity is an important supplement to the basic pension. In general, if an enterprise and its employees make contributions according to provisions of the state, the occupational annuity fund may improve the substitution rate of the employee¡¯s retirement fund by 10-20 percent whereas retirement income will increase by approximately 40 percent in the end. The retirement income provided by the occupational annuity may effectively make up the shortage of the basic pension and thus effectively increase the employee¡¯s retirement income, improve living standards after retirement and facilitate a continued stability and harmony of society.

2) As a market-oriented system under the supervision of the government¡¯s competent authorities, the occupational annuity system may on the one hand guarantee the equality and impartiality of the plan itself and utmostly try to pay attention to the interests of an absolute majority of employees. On the other hand an introduction to the market competition mechanism is guaranteed, improving operational efficiency of the occupational annuity and enhancing investment profitability which in return will increase accumulated fund assets of employees.

3) The characteristics of the annuity fund include: sustainable growth, long investment duration, being able to provide long-term steady fund sources for the capital market, drive the development of the capital market, boost prosperity of the capital market and accelerate the transition from residential savings to investments.

4) The retirees have high marginal compensation rates, therefore if the retirement income increases by about 40 percent it will effectively improve the consumption level of the retired groups and relieve the problem of insufficient domestic demands.

5) Building an occupational annuity plan and having the enterprise and its employees mutually to bear the duty of contributions is very helpful to strengthen the employees¡¯ awareness of old-age risks and assisting the employees in forming a sense for social responsibility in terms of old-age problems.

Expert¡¯s comments:

Building the occupational annuity system, and making health management and reasonable investment according to the requirements of national policies and regulations will bring long-term and considerable benefits to the country, the enterprises and the people. As financial conditions of an enterprise are limited, it is necessary to make a pre-calculation on the overall contribution scale of the occupational annuity. When we consider the absolute acquisition of benefits at the time of an individual employee¡¯s retirement, the problem of how to realize the balance between those employees at different ages is the most crucial and urgent one. Employees¡¯ benefits saved under a former welfare system shall not be impaired as a result of occupational annuity building. The enterprise must realize the combination of new and old programs of accumulating benefits by increasing the overall contribution scale or properly inclining to older employees.