China Expands Nationwide Private Pension System... "Responding to Aging Population and Decline in Population"

The Wall Street Journal (WSJ) reported on the 13th that China will expand its personal pension system nationwide starting this weekend.

According to the report, five Chinese ministries, including the Ministry of Human Resources and Social Security, issued a joint statement the day before announcing that workers covered by the national pension system will be able to open personal pension accounts starting from the 15th. The annual maximum contribution limit is 12,000 yuan (approximately 2.36 million KRW).

The personal pension system was introduced as a pilot project in 36 major cities, including Beijing and Shanghai, starting in November 2022, and is now being expanded nationwide. China's pension system is broadly divided into three types: the state-led national pension, voluntary workplace pensions provided by employers, and personal pensions.

WSJ noted that this measure comes amid rapid aging and the beginning of population decline due to China's long-standing one-child policy. It is expected that about 300 million Chinese aged 50 to 60 will retire over the next decade. Accordingly, China has decided to gradually raise the statutory retirement age, which is currently one of the lowest in the world, starting next year.

Earlier, the Standing Committee of the National People's Congress passed a proposal in September to extend the statutory retirement age for male workers from 60 to 63 over 15 years starting January 1, 2025. For female workers, the retirement age will increase from 50 and 55 to 55 and 58, respectively.