How to deal with the pain points and bottlenecks of "elderly care finance", the elderly care industry has gone through ten years of finance | elderly care | pain points
2013 is considered the first year of the development of the elderly care industry. In this year, the State Council issued several opinions on accelerating the development of the elderly care service industry, followed by multiple policy documents such as "financial support for the elderly care service industry".
In the past decade, the number of elderly care beds in China has increased by nearly 60%, and the entire industry chain has initially taken shape. In Beijing, Hebei, Shanghai, Zhejiang, Jiangsu and other places, some state-owned enterprises have established health and wellness companies, and state-owned capital is accelerating the layout of elderly care.
However, do our banks and insurance companies truly understand the needs of potential elderly care industry customers such as those born in the 1950s, 1960s, and even 1970s? Can pension financial products be inherited? Can elderly financial products be used for living expenses and medical expenses if suffering from dementia?
Recently, the Institute of Aging Research at Fudan University held a seminar on innovation in elderly finance, where scholars and industry representatives actively discussed existing problems and feasible solutions.
"We actually don't know enough about the needs of the silver haired population"
An aging society is not only a social structure, but also an economic structure.
"Commercial banks still face many problems and challenges in serving the elderly care industry." said Wang Lei, Deputy General Manager of the Elderly Care Finance Department of Bank of China. Firstly, credit support is the core function of commercial banks in serving the elderly care industry. However, currently, the scale of elderly care institutions is relatively small, and even some top enterprises have no more than 10000 beds. Many elderly care institutions are in a state of low profit or loss. They also found in their field research that the standardization and operation level of elderly care institutions is relatively low, especially in terms of digitalization. Some elderly care institutions have incomplete financial statements, making it difficult to meet the basic requirements of bank credit. Secondly, banks prefer heavy assets. Although some elderly care institutions have heavy assets, some are charitable medical and health land that cannot be mortgaged, making it difficult to obtain credit support. Thirdly, the investment return cycle of the elderly care service industry is relatively long, and the return rate is relatively low. And capital is profit driven, especially in direct financing, with relatively little involvement.
He suggested that the government strengthen top-level design, such as expanding the pilot scope of long-term care insurance, accelerating standardized construction of rehabilitation aids, medical equipment, nursing training, etc; To expand the coverage of liability insurance, property insurance, and accident insurance for elderly care institutions; Banks need to strengthen industry research and innovate credit policies in order to provide corresponding financial services to address the pain points and difficulties of the elderly care industry; Utilize the advantages of financial technology to support the digital transformation of elderly care institutions.
"Silver haired individuals aged 65 and above have an average investment and wealth management product value of 239000 yuan, and their willingness to manage their wealth is much higher than that of other age groups." Jin Lei, Assistant General Manager of the Wealth Management Department of CITIC Bank, introduced that existing pension financial products tend to be homogeneous and cannot meet the differentiated wealth management needs of the silver haired population.
"We actually don't know enough about the needs of the silver haired population," Jin Lei said. "The bottom line for wealth management needs of most silver haired people is to minimize the loss of retirement money.". When faced with urgent financial needs such as medical expenses, they hope to use a portion of their retirement funds to meet emergency needs such as medical and health care. Can we innovate pension financial products around the needs of "safety, liquidity, and sustainability"? "It is recommended to set up inheritance functions, which can moderately improve the risk tolerance of silver haired individuals and allow their children to inherit their personal wealth. In addition, non-financial functions of pension financial products can be added. For example, the dementia trust launched by Mizuho Bank in Japan allows customers' account funds to be used for living and medical expenses after falling ill."
"Not everyone has insurance or funds, but everyone has a bank account." Cheng Hao, Deputy General Manager of the Retail Platform Department of Industrial Bank, believes that settlement accounts are the most direct and effective means for commercial banks to serve middle-aged and elderly customers' wealth management business. What needs to be changed from savings pension to investment pension is not only the concept, but also the basic financial literacy. Commercial banks can become the most important battlefield for popularizing knowledge of various financial products and educating investors.
Can we learn from the stones of other mountains
The elderly care industry started early abroad, but it is still an emerging market in China. Can we learn from the innovative experience of foreign elderly care finance?
The elderly care system in the United States follows a market-oriented path, with individual customers being the main payers. Wei Lin, Deputy General Manager of Pacific Life Insurance Company, believes that in the future, China's trend towards fewer children, empty nest, and longevity will become the norm, and the market share of institutional elderly care will far exceed 3%. He suggested introducing relevant policies to guide the elderly care industry to further segment the market and actively develop inclusive and medium quality elderly care; Provide certain tax and fee policy support; Expand the loan scale of policy banks for the elderly care industry and reduce loan interest rates; Clarify the types of institutional elderly care land and reduce costs; Encourage social capital to enter the elderly care industry through equity investment, joint ventures, and other means.
"Commercial banks need to comprehensively upgrade their aging friendly transformation, transform and develop towards refined services." Jin Lei said that Kyoto Bank in Japan has created elderly and disabled friendly stores, with branches providing braille services, hearing aids, writing boards, and more. To provide convenience for the elderly, two banks in Japan have also launched mobile ATM vehicles.
In the UK, the annuity insurance market is mainly focused on spot annuity insurance, and different sub types of spot annuity insurance have developed. Liu Fangtao, Deputy General Manager of Taikang Pension Strategy and Planning Department, suggested that we can learn from the experience of the UK to explore spot annuity insurance. The so-called immediate annuity insurance refers to the situation where the insurer pays the insurance premium in full, and the insurance company immediately enters the payment cycle that year, starting to pay the annuity to the insured.
"Only when the coverage of personal pension reaches a certain level can it play its role"
The National Committee on Aging predicts that the size of China's elderly care financial market will reach 22.3 trillion yuan by 2030. Pension finance consists of three pillars, namely basic pension insurance, enterprise pension+occupational pension, and personal pension.
As of May this year, there were 37 million individual pension accounts opened nationwide, but the actual number of contributors was less than one-third of the number of accounts opened. "Only when the coverage of personal pension reaches a certain level can it truly play its role," said Li Wei, Vice President and Secretary of the Board of Directors of Suzhou Bank. Currently, only 5 urban commercial banks in China are eligible for personal pension, and we hope to approve more local small and medium-sized banks with pension resources to enter this field.
Yang Qihua, Deputy General Manager of Changjiang Elderly Care, believes that it is necessary to clarify the functional positioning of the first pillar, expand the coverage of the second pillar enterprises, and vigorously promote the development of the third pillar. He suggested reducing the proportion of contributions to the first pillar while increasing the adequacy ratio of contributions, in order to provide space for the transfer of enterprise annuities; Optimize tax incentives and increase individual willingness to participate in pension payments; Financial institutions need to break free from the limitations of their respective industries and put themselves in the customer's shoes, effectively coordinating and operating the financial assets of middle-aged and elderly people from the perspective of personal overall elderly care planning.
In the view of Liu Xiao, the fund manager of the Investment and Financial Engineering Department of Xingzheng Global Fund FOF, the first step in the future is to build an "interconnected" channel between corporate pension and personal pension, increase the transfer mechanism between corporate pension and personal pension, and achieve the merger of tax preferential amounts for corporate pension and personal pension; Improve the convenience of investors through special mechanisms, allowing participants to receive personal pension in advance under special circumstances to meet liquidity needs
The insurance industry will usher in development opportunities, and the demand for institutional elderly care will be very significant
According to calculations, the silver economy will become a new economic growth point in China. By 2050, the scale of the silver economy will reach nearly 5 billion yuan, accounting for 35% of total consumption.
What new opportunities will the silver economy bring? "Pension finance is a Chinese concept that covers three dimensions: pension services, pension funds, and the pension industry," said Professor Feng Jin from the School of Economics at Fudan University. From the perspective of pension service finance, it needs to be considered from a full lifecycle perspective. According to relevant research, the elderly population is gradually showing characteristics of high asset ownership and high proportion of risky investments, and the insurance industry will usher in good development opportunities in the future. From the perspective of pension finance, the future trend will depend on our overall grasp of the account system design and investment return rate. From the perspective of elderly care industry finance, the demand for institutional elderly care will be very significant in the future.
"Financial response is an extremely important component of China's active strategy to address population aging." Wu Yushao, Vice Dean of the Institute of Aging at Fudan University, believes that although pension finance has accumulated some experience after ten years of development, it is still in its early stages. As the first physical research institution in domestic universities to study aging issues, Fudan University Institute of Aging Research has been continuously focusing on aging finance issues for over a year, and has established the Yinfa Economic Development Research Center. "To cope with China's aging population, we need to learn from advanced foreign experiences, but more importantly, we need to base ourselves on China's national conditions."
