China has the largest aging population in the world. It has become crucial for the government to ensure people's access to elderly care. In his report to the 19th National Congress of the Communist Party of China (CPC) held last October, General Secretary of the CPC Central Committee Xi Jinping pledged to "develop a sustainable multi-tiered social security system that covers the entire population in both urban and rural areas."
In such a system, basic pension schemes for all citizens are the foundation and various commercial insurance plans act as important supplements. The World Bank indicates that a sound social security system is held up by three pillars: a basic pension scheme offered by the government, corporate annuity and commercial pension insurance that can be purchased for individual demands.
China started building a basic pension scheme for urban residents in the 1990s and later launched a similar system for its rural residents. Now these schemes cover more than 85 percent of the country's residents. Yet the other two pillars remain undeveloped. While the progress of corporate annuity is slow, commercial pension insurance has attracted growing attention.
In the past, there was little public awareness of commercial pension insurance. According to data from the China Insurance Regulatory Commission, commercial pension insurance accounted for only 4.4 percent in all personal insurance in 2016. Less than 1.3 percent of the Chinese population was insured for their pensions.
The government has recently adopted a series of policies to encourage the development of corporation annuity and commercial pension insurance. These policies are expected to help make a difference in the near future.
This is an edited excerpt of an article published in Oriental Outlook on February 8