Personal Tax-Deferred Commercial Pension Insurance (Pilot Program)*

Voluntary participation

Taxpayers to which the pilot tax policies in this scheme apply, who have turned 16 and have not reached the statutory retirement age.

General finances

• Fully funded personal pension plans based on contribution payments and capital revenues.

Contribution payments

• Persons provide contributions themselves and decide freely on the amount of contribution payments.
• Contributions paid monthly or annually until insured person reaches the statutory retirement age.

State support

• Contribution payments of persons who obtain income from wages or obtain continuous income from remuneration for their personal services (up to 6% of the monthly income – or CNY 1,000, if this is considered lower) are not subject to tax.
• Contribution payments of other persons (up to 6% of the taxable annual income – or CNY 12,000, if this is considered lower) are not subject to tax.
• The investment returns of the funds which are then placed in the individual accounts are not subject to tax.

• Pension plan providers manage pension funds and pay benefits directly to the eligible person.
• The ‘China Banking and Insurance Regulatory Commission’ regulates licenses, oversees the pension plan providers together with the ‘China Securities Regulatory Commission’, the ‘Ministry of Finance’, the ‘Ministry of Human Resources and Social Security’ and the ‘State Administration of Taxation’.

• Pension benefits can be claimed when reaching the statutory retirement age or the contractual age for pension claiming (not earlier than the statutory retirement age of the basic old age pension insurance scheme for employees).
• The person has the right to change products before claiming the pension, including product change within the same insurance company or between different insurance companies.

Pension payments

• Pension provider should guarantee the option of life-long annuity paid monthly or yearly; if the sum of pension paid is less than the accumulated capital (through contribution payments and investment yields minus administrative costs and costs/fees of pension provider) at the time when the insured person dies, the difference is paid as a lump sum.
• Option for fixed-term (15 or 20 years) pension payment on monthly or yearly basis; if the sum of pension paid is less than the accumulated capital (through contribution payments and investment yields minus administrative costs and costs/fees of pension provider) at the time when the insured person dies, the difference is paid as a lump sum.
• The interval between two consecutive pension payments shall not exceed one year.

Taxation on pension payments

• 25% of the pension is not subject to tax; the remaining 75% is subject to income tax at a proportional tax rate of 10%.
• Information on social security contributions is currently not available.