GE : imagination at work

职 业 加 油 站 Career DevelopmentWhat does the RIAP stand for?Personal AccountA Win for the Future— GE’s Retirement Income Accumulation Program (RIAP)With the proliferation of reports about a new scheme to delay the legal retirement age, causinga strong social outcry, many GE employees have questions about their financial futures and howtheir retirement will be affected. To alleviate concerns and answer questions, we’re introducing GE’sRetirement Income Accumulation Program (RIAP) in this issue of GE & ME.RIAP stands for Retirement Income Accumulation Plan.Each GE employee can apply to join RIAP after his or herprobationary period has passed. Employees’ insuranceaccounts are composed of personal payments andcompany contributions. With the RIAP, 3% of employee’smonthly salary will be accumulated in a personal unitedlink insurance account, and the company will pay 5% ofemployee’s monthly salary (net income) to employee’sparticipating insurance account for accumulatedinvestment. The right figure details the workflow.How are the profits?Personal Payment(deducted by company)United LinkInsuranceSteady AccountBalanced AccountAggressive AccountCompanyPaymentParticipatingMargin AccountPrincipalSurplus AccountProfitsThe companypayment on thepersonal accountwill be transferredto company’scollective account ifan employee resignsbefore he or shemeets the vestingconditions.Collective AccountHow do we support our retired life financially?How much do we need on a monthly basis to live stable lives during retirement? To answer this question, we need to use anindex called the “Pension Replacement Rate”, which is used to judge one’s financial statues after retirement. It is generallyacknowledged that 70% to 80% of the pension replacement rate can guarantee a generous standard of living in retirement.Annual Income Benefits from Welfare ProgrammsPension Replacement Rate=Annual Income before RetirementAccording to statistics, the pension replacement rate in China dropped from 72% in 1998 to 57% in 2003, and will be reduced to35% in 2020. This presents the growing challenge of supporting ourselves after we retire.The Chinese “three-pillar” pension systemParticipating Insurance: Constant Return + Annual ReturnUnited Link Insurance: No Constant Returns, the Risks and Returns Depend onDifferent Investment Types.AccountSteadyBalancedAggressiveUnited Link Insurance TypeField and Rate of InvestmentSecuritiesand Funds0-30%10-60%20-80%Investment ProfilesBankDeposits15-70%15-50%5-20%Bonds25-85%25-75%15-75%RiskDegreeExample: Employee A has been participating in theprogram for eight years, and he received 170% of thereturn value rate and more than 13% of the annualreturn rate despite negative conditions in the Chinesestock market.Case Study: Employee A’s Returns from RIAPApril 2004 to June 2012AccumulatedReturn ValueRateAnnualReturn RateSteady Balanced Aggressive49.93%136.96% 170.18%5.19% 11.39% 13.23%The First PillarSocial SecurityThe Second PillarSupplementalPensionParticipatingInsuranceThe Third PillarPersonal SavingsUnited LinkInsuranceGE’s Retirement Income Accumulation Program (RIAP)The “three-pillar” pension system which includes social security, supplemental pension and personal savings has become a basicmodel across the globe. China, too, is vigorously trying to establish a “three-pillar” pension system, one unique to the country that willconsist of statutory basic pension, enterprise annuity and individual deposits. A complete system can compensate the pension funds,Under what conditions can I receivethe company payment?You are eligible for the company payment on your insuranceaccount under the following conditions:• After participating in the program for five consecutive years,you can get 60% of the company payment.• The remaining 40% of the company payment will be paidwhen you retire from GE China (or affiliate companies).The ownership of the company payment will return to GE when oneemployee resigns before meeting the specified conditions.Extended topic: personal financeDo I need to pay the individual income tax?According to Chinese Tax Law, the income taxes should bededucted from both individual payment and company payment.You don’t need to pay the individual income tax when you drawon your account since the company already paid your individualincome tax before the payments were deposited in your personalaccount.increasing the replacement rate and filling people’s accounts with a financial cushion.To stay a step ahead of the looming pension crisis, GE has launched the RIAP for its Chinese employees. With the purposes of “earlyestablishment, early participation, early investment and early profit”, this program will accumulate sufficient funds for employees’retired life and provide an elaborate plan to ensure a comfortable lifestyle.As the saying goes, “Ignoring money management results in being ignored by money”. More and more people realize that earlyinvestment and planning are crucial in managing personal finances, especially as inflation erodes one’s personal wealth.People have different focuses in different phases of life. Make financial planning a priority to maximize the effectiveness of your funds,helping you make future arrangements and achieve your goals throughout your life.31 GE & MEGE & ME 32