China to expand private pension scheme nationwide from Dec 15

BEIJING (Reuters) - China said on Thursday it would expand a private pension scheme nationwide from December 15, following a pilot effort, as it moves to plug a pension gap in plans to help a rapidly ageing population.

Those covered by public pension insurance will be allowed to open private pension accounts and invest up to 12,000 yuan ($1,652) a year in financial products, five official bodies, including the human resources ministry, said in a joint notice.

The scheme expands the category of eligible pension products by including government bonds, designated pension savings and index funds, they added.

The move follows trials launched in 36 cities and regions in November 2022. More than 60 million private pension accounts were opened under the pilot program, state-run Xinhua news agency said in June.

The launch of China's version of IRA, or Individual Retirement Accounts in the U.S., comes as the Asian giant seeks to remedy shortcomings in current arrangements.

Private pensions are a part of the so-called third pillar of China's pensions system to supplement the public safety net and corporate annuities.

But academics say both corporate and private schemes are underdeveloped, while the public scheme is already under significant financial pressure.

In September, the top legislative body approved a proposal to raise China's retirement age, to allay the economic pressure of a shrinking workforce.

($1=7.2616 Chinese yuan renminbi)

(Reporting by Ziyi Tang and Ryan Woo; Editing by Clarence Fernandez)