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BEIJING, April 21 (Reuters) – Chinese employees will henceforth be able to invest and supplement funds in their pension accounts, authorities said on Thursday, launching the country’s first private pension scheme as they tackle economic challenges linked to an ageing population.
Employees can contribute up to 12,000 yuan ($1,860) per year to their pension fund under the new scheme, which will be rolled out with one-year trials in some cities before being implemented nationwide, the government said in a policy document on its website.
Until now, both employees and employers have contributed fixed amounts under state pension plans.
The milestone marks the official launch of China’s private pension sector after almost four years of pilots, and is expected to spur foreign insurers and asset managers to accelerate their expansion into the world’s most populous nation.
“In the mid to long term, the new policy will benefit the retirement market by helping to accumulate more retirement income, increasing residents’ retirement savings as well as investing awareness,” said Leo Shen, Shanghai-based China head of fund management business at Allianz Global Investors.
In 20 years, 28% of China’s population will be more than 60 years old, up from 10% today, making it one of the most rapidly-ageing populations in the world, according to the World Health Organization.
The scheme “should also benefit China’s onshore capital market by providing an additional source of long-term capital,” Shen told Reuters.
Part of the challenge for policymakers will be to persuade individuals to invest part of their earnings in the scheme. In 2021,…
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