China's State Council on Thursday unveiled the outlines of a long-awaited framework for a voluntary private pension system as the third pillar of the country's retirement safety net.
Under the plan, participants will be able to contribute a maximum of 12,000 yuan ($1,885) a year to personal pension accounts, with preferential tax policies to encourage participation. The scale of the coming tax breaks wasn't specified.
An announcement on the China Securities Regulatory Commission website under the heading "Opinions of the General Office of the State Council on Promoting the Development of Individual Pensions" said the funds in personal pension fund accounts can be used "to purchase financial products that meet the requirements of different investors, such as bank wealth management, savings deposits, commercial pension insurance, and public funds."
The State Council called on the Ministry of Human Resources and Social Security and the Ministry of Finance to select some cities for a one-year trial and then, addressing problems encountered along the way, "gradually roll it out."
The China Securities Regulatory Commission, in a separate announcement Thursday, called the announcement of the new framework "an important measure to meet the people's multi-level and diversified pension security needs."
The CSRC pledged to promptly hammer out supporting rules and regulations for personal pension investment in public funds — accelerating the emergence of an environment of "benign interaction and coordinated development between pensions, capital markets and the real economy."
