China launched its first private pension scheme on Thursday, meaning that the country’s employees will now be able to invest and supplement funds in their pension accounts. The move comes as part of a range of measures to address the economic challenges posed by an aging population, reports Nikkei Asia. Employees can contribute up to RMB 12,000 ($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.
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