China on Thursday rolled out a private pension scheme to complement the nation's current pension system in its latest effort to tackle the strains of an aging population.
The scheme allows Chinese citizens to contribute up to 12,000 yuan (about 1,872 U.S. dollars) annually to individual pension accounts that would be subject to closed-end management, according to guidelines released by the State Council.
The cap would be adjusted according to social and economic development as well as how the country's pension system evolves.
The funds in the accounts can be used to purchase financial products that are of relatively lower risk and have a longer-term investment horizon, according to the guidelines.
Workers who currently contribute to the basic pension insurance can participate in the scheme on a voluntary basis, the guidelines said.
The government will offer tax incentives to encourage participation in the new system, the guidelines said.
The scheme will be piloted in some cities for a year before it is implemented nationwide, it said.
The private pension mechanism will complement the country's current pension system consisting of the basic old-age pension, enterprise annuities as well as commercial insurance for the elderly, offering another layer of support for the aging population, analysts said.
Policymakers in China are actively taking measures to address the issues of an aging society. According to the latest census, by 2020, the number of Chinese people aged 60 or above had reached 264 million, accounting for 18.7 percent of the country's total.