Pension Photo: IC

China's Ministry of Human Resources and Social Security, joining four other government departments, issued a notification on Thursday announcing the nationwide rollout of a private pension system. Effective from December 15, the initiative expands a trial program previously implemented in 36 pilot cities and regions across the country, Xinhua News Agency reported.

The new system is a market-oriented supplementary retirement insurance, which is supported by national policies. 

Individual participants can choose to deposit money into a dedicated account, with an annual limit of 12,000 yuan ($1,651), to purchase eligible financial products. Upon reaching retirement age, the account will provide an additional source of pension income, supplementing the basic pension insurance, Xinhua reported.

Unlike banks' regular financial products, funds, or commercial insurance, individual pension contributions will enjoy preferential tax treatment.

To encourage investment in the new private pension scheme, the notice calls for optimizing available investment products. In addition to banks' existing financial products such as wealth management products, savings deposits, commercial pension insurance, and public funds, specific pension savings and index funds will be included in the individual pension product catalog.

The new provisions have been introduced to allow earlier withdrawals under specified conditions. In addition to retirement, instances of permanent disability, those who move abroad, and other specific participants may access their personal pension savings, including those who suffer from severe illness, meet specific unemployment insurance requirements, or are recipients of minimum subsistence allowances.

More than 60 million people have opened personal pension accounts since the introduction of China's private pension system in late 2022, data from the Ministry of Human Resources and Social Security showed, Xinhua reported in June.

In November 2022, the government-supported, voluntary, and market-oriented personal pension system was open to qualified residents in 36 pilot Chinese cities and regions including Beijing, Shanghai, Guangzhou, Xi'an, and Chengdu.

Global Times