China expands private pension scheme to address ageing population

China announced on Thursday that it will roll out a nationwide private pension scheme starting December 15 to address the pension gap and support its ageing population.

Public pension insurance beneficiaries can now open private pension accounts and invest up to 12,000 yuan ($1,652) annually in financial products, according to a joint notice from five official bodies, including the human resources ministry.

The expansion of the private pension scheme follows a successful pilot programme launched in 36 cities and regions in November 2022. Over 60 million private pension accounts were opened during the pilot phase.

Private pensions are part of China’s third pillar pension system, complementing public safety nets and corporate annuities.

However, experts note that both corporate and private pension schemes are not well-developed, and the public system is facing financial strain.

In September, the government approved a plan to increase China’s retirement age to address the economic challenges posed by a declining workforce.

Attribution: Reuters

Subediting: M. S. Salama