By Jiang Xueqing

China should encourage individuals to open personal accounts and choose investment vehicles under a private pension plan rolled out by the country, and the plan should be better connected with basic old-age insurance and occupational pensions to complement the current guaranteed retirement income system, industry experts said.

The nation unveiled the framework of a private pension plan earlier this year amid increasing efforts to address the needs of its rapidly aging population. At the end of last year, those aged 65 years and above accounted for 14.2 percent of the more than 1.41 billion population on the Chinese mainland, said the National Bureau of Statistics.

People covered by basic pension insurance for urban employees or by basic pension insurance for urban and rural residents are allowed to contribute up to 12,000 yuan ($1,739) per year to their pension accounts. Funds held in the accounts will be invested in certain financial products that meet regulatory requirements, including banks’ wealth management products, deposits, commercial pension insurance and mutual funds. The government will offer tax incentives to encourage participation in the plan, said the General Office of the State Council.

In order to accelerate development of the private pension plan, China needs to encourage workers engaged in flexible employment to join the plan, said Wang Xiangnan, deputy director of the Research Center for Insurance and Economic Development of the Chinese Academy of Social Sciences, in a report issued jointly by the center and the 21st Century Institute of Finance at a recent seminar in Beijing.

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