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China to launch pilot scheme for retirement savings as population ages

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SHANGHAI: China will kick off a pilot scheme for long-term retirement deposits in November, part of efforts to meet rising demand for pension products from an ageing population, the government said on Friday (Jul 29).

The announcement, jointly made by China’s central bank and the country’s banking regulator, came three months after China launched the country’s first private pension scheme to tackle economic challenges in an ageing society.

The retirement savings programme is aimed at “further enriching financial products for old-age protection, and meeting diversified needs”, the People’s Bank of China and the China Banking and Insurance Regulatory Commission (CBIRC) said.

China’s “Big Four” state banks will start the year-long trial in five Chinese cities including Hefei, Guangzhou, Chengdu, Xi’an and Qingdao, the statement said.

The pilot retirement deposit products have maturities of five, 10, 15 and 20 years, with individual deposits capped at 500,000 yuan (US$74,231.33) at each bank.

Under China’s private pension scheme, funds held in individual pension accounts can be invested in a range of financial products including deposits, wealth management products and mutual funds.

In 20 years, 28 per cent of China’s population will be more than 60 years old, up from 10 per cent today, making it one of the most rapidly-ageing populations in the world, according to the World Health Organization.

Independent consultancies estimate China’s private pension market will grow to at least US$1.7 trillion by 2025, from US$300 billion currently.