The development of pension finance requires the full participation of many types of institutions, leveraging their respective advantages and cooperating with each other.

This year is the 20th anniversary of public funds of China. For the fund industry, there are three major events this year. The first was the notice in April by five ministries on personal tax deferment for commercial insurance on a pilot basis in the Shanghai, Fujian and Suzhou industrial parks. It is expected that starting in May next year, the public fund industry will be included in this, which will be the first time the fund industry has been included in the pension policy, which provides protection for future participation in individual pensions.

The second, this is the first year of the public fund's pension target. The China Securities Regulatory Commission issued the guidelines in March this year for pension funds to guide the public funds to realize the advantage of professional investment and serving personal pensions. CSRC has now approved the second batch of products – this is the reserve and accumulation of products for the industry, opening the door for investments and individuals. The fund industry has its own pension products and exclusive pension products.

The third event is the 20th anniversary of the public fund. In this period, the public fund industry has accumulated rich experience in the area of pensions. For the next 20 years, I hope the industry can seize the opportunities. With the support of policy, the public fund industry must strengthen itself to meet the needs of pension funds.

Pension funds should have four characteristics. The first is to guide investors to have a long-term horizon, to invest for the long-term. The second is to focus on asset allocation and to effectively control risks. The third is to pay attention to the role of equity investment for asset appreciation, and at the same time there should be certain restrictions on equity investment.

In the face of challenges and pressure, the fund industry must not forget its purpose, and that is to serve investors and bring benefits to the people. There should be four requirements for public funds. The first is to establish a long-term assessment of the pension fund. The second is to encourage a calm, long-term and patient approach. Third, we hope the industry will avoid the sales tactics of the past, and mobilize future channels to attract investors’ participation. The fourth is investor education – we must also provide education to help enhance knowledge and awareness of pension products and financial well-being.

First, let's look at the silver economy and its development strategy. In 2007, the World Health Organization proposed that in order to invest in health and build a secure future, people began to use artificial intelligence and health management as the core for a big healthy economy. This is the third wave of wealth after the agriculture economy and the industrial economy, which is the issue we are discussing today.

An aging population’s impact on economic growth and consumption. Both the demand and the supply side need to be reformed. This is the development of healthy wealth. Our responsibility is not to build a large hospital, but to build a sustained health care and health service system in the entire chain, which is what health wealth growth will fall into. In this process, financial innovation is needed. The first stage is to establish a system and a comprehensive coverage guarantee, and China is struggling with this. We need to adjust the structure of an aged society, and financial innovation is needed for that.

There are two financial innovations that cannot be delayed today. One is the national pension and the other is the PPP for medical care and old-age care, which requires a lot of financial innovation. Today's pension has three components, government, enterprise, and individual, to spread the risk. The three pillars constitute a national pension, which is the trend we are seeing. With aging, the national pension and government pensions rise rapidly. The coverage is basic, and the society is aged. At that time, it is necessary to adjust the structure and increase the second pillar and the third pillar. The first pillar of pension sources is government taxes or corporate payments; the second pillar is enterprises, which will go into costs, reducing profits. The third pillar - personal pension resources. Personal pensions will play a major role in the future, and this is the trend. The three pillars will work together to make pensions sufficient.

In today’s pension market, you have two accounts, three types of plans and four major categories of products that constitute a platform. The first product is created by the state with taxation. The United Kingdom issued a pension bond for the elderly over 65 years old – this is a product. The second product is pay now, where young people pay taxes, and the elderly receive them. The third product is a traditional contract product, mainly based on insurance, and the fourth is a modern trust product where the investor and the trustee share responsibility.

Innovation in the field of retirement is in the regulation and tools of PPP. A lot of innovation is required to have a price-oriented PPP – you need to have every price, type of person, purchasing power and cost clearly defined. There are policy innovations, technological innovations, and product innovations. It should be said that the medical and pension PPP that China faces today is a huge financial innovation.

First, I want to share with you the considerations of pension funds. The first consideration is that we need to invest in personal pensions. There are many ways to invest in the ageing of the elderly, and we need to have asset allocation.

The second is that pension investment needs to take into consideration the characteristics of life cycle cash flow and follow the rules of the life cycle and dynamic asset allocation is at the core.

The third thing to consider is that the advantage of pension investment lies in investing for the long term and in batches.

“Combined investment, compulsory custody, public disclosure, independent operation, and strict supervision” have produced 20 years of prosperity for the public fund industry. Providing a one-stop service for the elderly is the only way for public funds to exert their institutional advantages, practise value investment, serve the real economy and realize inclusive finance.

In terms of asset security, operational transparency and cost-benefit, public funds can provide safe, reliable, cost-effective and competitive management tools for each pillar pension. The combination of pension funds and public funds can help promote the healthy development of the capital market.