Hot Topic: How Can Corporate Pension Plans Break Through the "Large Enterprise Monopoly"?

In the job market, the “Five Insurances and Two Funds” have become one of the important standards for measuring quality jobs. Recently, the “Two Funds,” specifically the “Enterprise Annuity,” has attracted widespread social attention. In December 2025, the Ministry of Human Resources and Social Security and the Ministry of Finance jointly issued the “Opinions on Further Improving Enterprise Annuity Work,” which proposes expanding the coverage of the enterprise annuity system, simplifying the establishment procedures, and promoting the safe and regulated operation of funds, so that more employees can enjoy this retirement security.

So, what exactly is an enterprise annuity? How can more workers benefit from this welfare?

Zhang Yi, a National People’s Congress deputy and director of the School of Society and Ethnic Studies at the Chinese Academy of Social Sciences University, recently gave an exclusive interview to the Financial Times, providing an in-depth analysis of the current development of enterprise annuities in China and offering reform suggestions.

Zhang Yi stated that China has built a multi-layered, multi-pillar social insurance system. The first pillar is the basic pension insurance led by the state; the second pillar is the enterprise annuity (occupational pension) established through joint contributions by enterprises or other employers and individuals; the third pillar consists of market-based retirement financial products purchased by individuals.

He explained that the first pillar is mandatory, so the contribution rate is very high. The second pillar is non-mandatory, so the contribution rate is low. The third pillar is still being promoted. Therefore, the coverage of basic pension insurance in China continues to expand, with significant results. “Currently, the number of participants in urban and rural residents’ pension insurance and urban employees’ pension insurance exceeds 500 million. Especially during the 14th Five-Year Plan period, the number of urban employees contributing to pension insurance has been rapidly increasing, adding nearly 50 million people.”

However, compared to the steady progress of the first pillar, the development of enterprise annuities in the second pillar shows obvious imbalance. “For example, the coverage rate of enterprise annuities is higher in state-owned enterprises and large companies, but in private and small to micro enterprises, the contribution rate remains low,” Zhang Yi said.

Why is it difficult to achieve universal coverage for enterprise annuities?

“The existing institutional framework draws on the relatively mature experience of Western industrialized societies, where the premise is that workers are in long-term, stable employment relationships,” Zhang Yi analyzed. Currently, with the development of intelligentization and industrial restructuring, the proportion of stable employed workers is decreasing, and enterprises are trending toward small-scale, platform-based, and subcontracted development. “In the past, we often said ‘a job for life,’ but now labor mobility has significantly increased, and the scale of flexible employment and new business forms is huge. It is estimated that flexible workers number up to 240 million.”

In his view, this high mobility makes it difficult for enterprises to establish a sustainable and stable pension contribution mechanism. “The pension model based on industrial society assumptions is facing real challenges due to the trend toward small-scale, gig, and flexible employment.”

Faced with this profound change, Zhang Yi called for: “It is urgent to transform the pension insurance model of industrial society into a new type of insurance system better suited to an intelligent society.”

Regarding platform economy and flexible employment groups, Zhang Yi suggested that through negotiations among the government, trade unions, platform companies, and platform workers, combined with big data technology, new ways of pension contribution suitable for new business forms should be explored.

“For example, for couriers, 80% of the income from each delivery service can be allocated to the courier, and from this 80%, 10% can be set aside for pension insurance, medical insurance, or work injury insurance. Part of this can be pooled into a fund similar to an enterprise annuity, forming a fund pool together with basic pension insurance,” Zhang Yi outlined a possible path for the implementation of future pension systems.

For groups like individual entrepreneurs and sole proprietors, he believes that system adaptation is also necessary. “They can be encouraged to pay a relatively low contribution rate, and while paying basic pension insurance, they can also make additional contributions equivalent to an enterprise annuity,” Zhang Yi said. Through the coordinated efforts of the three-pillar system, the income security for workers after retirement can be effectively improved.

Source: Financial Times Client

Reporter: Sun Rong

Editor: Liu Nengjing