Feasibility And Suggestion Of Introducing Collective Defined Contribution Plan Into China’s Enterprise Annuity

Since 1990 s,China’s social security system has basically achieved "full coverage of system",but there are heavy responsibilities in terms of "full coverage of population".In addition to basic pension insurance and occupational pension,the coverage and replacement rate of enterprise annuities and individual pensions are inadequate.Based on the background of demographic transition and the needs of constructing the multi-level social security system,this paper suggests introducing the Collective Defined Contribution plan(hereinafter referred to as CDC)reforming of the mechanism of fund-raising and contribution in order to improving the return on investment,the rate of replacement and coverage.On the basis of relevant theories and concepts,this paper clarifies that CDC is a mixed enterprise annuity plan that combines the characteristics of Defined Benefit plan(hereinafter referred to as DB)and Defined Contribution plan(hereinafter referred to as DC)analyzing the necessity of introducing CDC into China based on its birth background,operation mechanism and development status.In the first part of authentic proof,mean-variance model and Sci Py optimizer are used to solve the optimal portfolio of enterprise annuity funds,and then backtesting multiple CDC models based on China’s capital market data from October 2006 to April2022.The simulation results show that CDC could pay basic pension every year during 16 years and nine CDC models could achieve reserve accumulation.Based on the previous empirical study,the second part uses Wolfram Mathematica 8 software to actuate DC and CDC replacement rates,and the results show that CDC can meet or even exceed DC on replacement rates within a predictable time.Finally,this paper analyzes the difficulties that CDC may encounter in being introduced in China and puts forward corresponding solutions and suggestions from different perspectives.It is recommended to first legally access CDC to ensure that it enjoys existing tax credits.In terms of the path of enterprise startup,to begin with,we should rely on the single enterprise annuities of large state-owned enterprises and then gradually generalise collective plans in all industries and enterprises.It is also needed to simplify the process for enterprises to join CDC,optimize the operation service and use information technology to publicize it through online and offline channels,gradually improving its recognition and participation rate,and finally realizing it indispensable role in our social old-age security system.