China to implement private pension system with a contribution cap of about $1,800 a year: report
China will soon start a new era of “private pensions” with the imminent implementation of a relevant mechanism, according to a report by the Shanghai Securities News published on Wednesday.
The new mechanism, which is characterized by policy support from the government, voluntary participation and market-oriented operations, will be an important transformation of the current pension system that has a basic pension insurance and a corporate pension.
According to the report, those who contribute to the basic pension insurance for workers in cities and towns, as well as in the life insurance system for urban and rural residents can participate in the private pension system.
They can open their own private pension account and deposit money as they wish. The accounts can be opened at qualified commercial banks or through other designated financial institutions. The accounts have closed-end management and participants cannot draw the money in advance unless under exemptions specified in the regulations.
The report also disclosed that the cap of private contributions should be 12,000 yuan ($1,869) per year. The government might adjust the cap based on economic development standards and how China’s pension system develops in the future.
Read more @Global Times
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