The insurance regulator CIRC is working with the Ministry of Finance on regulations for the long awaited individual tax-deferred commercial pension insurance plan, with a pilot programme expected to be launched before the end of this year.
"The time and conditions of having the pilot is mature and we are working hard to perfect regulations, to guarantee fairness and fund security," said Mr Yuan Xucheng, Director of the CIRC's life insurance supervision department. The CIRC would select qualified insurance companies to participate in the pilot, and set a relatively high threshold when selecting qualified insurers to enter this field to ensure the integrity of funds.
He said that the pilot programme has basically been shaped. However, issues such as taxation, product design and public acceptance of the pension scheme are complicated and that research and decision making needed time.
“The tax-deferred pension plan is a new thing, Pension funds need to be locked in for the long term. It takes time for the public to recognise and accept this,” he said.
Under the tax-deferred endowment insurance scheme, tax is deferred on the income which the insured uses to pay for premiums. The insured pays personal income tax only when the endowment benefits are collected.
According to Mr Yuan, China's ageing population has become a serious issue. By the end of 2016, China had 230 million people aged over 60, accounting for 16.7 % of the nation's population.
In a statement on Tuesday, the Chinese government reiterated that it will speed up the development of commercial pension insurance. By 2020, a well-regulated commercial pension insurance system will be in place.
Commercial pension insurance should support the social pension system, promote eldercare services, and support the country's financial security and economic growth, the statement says.
Insurers should offer personalised services to individuals and households, as well as annuity programmes for employers, it says. Commercial insurers are also encouraged to provide support for the pension system and to take part in the investment and management of basic pension funds and the National Social Security Fund.