An undated photo shows an elderly woman dining at a nursing home in Hangzhou, East China's Zhejiang province. [Photo by Sun Yidou/For China Daily]
With increasing policy support and market innovation, a more diversified and vital pension finance market is being formed in China amid rapid population aging.
Pension finance, put forward as one of the "five major sectors" at the Central Financial Work Conference held in 2023, has received significant attention. Then in 2024, the State Council, the country's Cabinet, issued a series of policies intended to accelerate the establishment of a comprehensive pension finance system and promote the integration of medical and elderly care, including eldercare services and industrial synergy. Among basic endowment insurance, enterprise annuities, private pensions and the three-pillar pension insurance system, private pensions are becoming a key factor.
To meet varied needs, financial institutions have introduced diversified products such as target-date funds, pension wealth management, commercial pension insurance and pension trusts to the market, helping the pension finance market expand rapidly. Meanwhile, emerging innovative products and improved adaptability have also enhanced the user experience for seniors.
By optimizing market-oriented operational mechanisms, revitalizing idle assets, attracting foreign investment and developing the silver economy, pension services are developing at scale and strengthening their branding effectiveness. The diversification of China's pension market is also accelerating, with active engagement of banks, insurers, funds and trusts alongside significant social capital support.
Meanwhile, the pension finance and eldercare sectors are facing deep integration in China, promoting the construction of eldercare facilities, integration of medical and eldercare services and travel-related eldercare. The combination of the pension financial market and the silver economy also releases the potential for more pension consumption.
To meet the diverse needs of the elderly, financial institutions need to diversify the design of financial products. For seniors with low risk tolerance, financial institutions can launch principal-protected savings products, high-yield time deposits or annuity insurance to ensure the safety and stability of funds. For seniors with some investment capability, low-risk wealth management products or pension target funds can be designed to take into account incomes and liquidity. In addition, long-term care insurance and medical savings accounts combining health needs can also provide more targeted protection for seniors.
To further enhance the services experience, it is necessary to adopt age-appropriate transformation. For the online experience, optimizing the mobile banking application interface and simplifying the operating process for seniors are necessary undertakings. In offline outlets, communities need to set up a dedicated service window for seniors to provide them with transparent patient consultation services.
For the purpose of providing more comprehensive pension security for the aged, financial institutions should actively unite pension communities, medical institutions and cultural tourism enterprises to launch "one-stop" services as well as enhance the attractiveness of related products.
To assist the elderly to make rational decisions and prevent financial fraud, it is helpful to strengthen risk warnings and simplify product descriptions. At the same time, exclusive complaint channels should be opened in a timely fashion to respond to the needs of the elderly in protecting their rights and interests.
Next, policymakers should prioritize coordinated reforms to enhance the multi-pillar pension framework with the aim of ensuring the healthy development of China's pension finance system. The first step is to expand coverage of basic endowment insurance and improve its long-term stability. The second step is incentivizing more businesses, particularly small and medium-sized enterprises, to adopt enterprise annuity plans through tax breaks and policy support. Simultaneously, accelerating the rollout of private pensions remains critical, requiring optimized account management, diversified investment products and enhanced tax incentives to boost participation.
Furthermore, more attention should be paid to regional coordinated development for the inclusiveness and fairness of eldercare financial services. On the one hand, the government should support underdeveloped areas and promote the extension of pension financial services to rural and underdeveloped areas through fiscal transfer payments and policy preferences. On the other hand, pension financial policies should be formulated based on local economic conditions and characteristics of seniors to meet the needs of different regions.
In terms of financial institutions, they should innovate financial products to deliver targeted support for the senior care sector. For capital-intensive sectors such as senior living communities and nursing facilities, institutions can provide long-term low-interest loans, specialized funds or public-private partnership financing to bolster the construction and operation of eldercare infrastructure. Additionally, developing insurance products linked to eldercare services — such as long-term care insurance and health insurance — will not only secure financial protection for seniors, but also enhance the sustainability of eldercare providers. The promotion of reverse mortgage pension insurance options could further unlock seniors' housing assets, channeling more funds into the sector.
Deep integration of financial services with eldercare is essential to improve seniors' quality of life. By collaborating with senior living communities, institutions could introduce installment payment plans and dedicated pension savings accounts, thus lowering barriers to accessing high-quality care. Establishing on-site service stations within communities would offer seniors convenient financial services, while integrating value-added offerings like health management and rehabilitation care to create "one-stop" pension finance solutions.
Financial institutions can support medical-eldercare integration projects by funding the development of healthcare facilities within care institutions, elevating service capabilities as well. Partnerships with medical providers could yield health management-linked financial products, such as health savings accounts and chronic disease insurance, to deliver comprehensive coverage for seniors — spanning check-ups, rehabilitation and nursing care.
Resource integration will also drive ecosystem development in the eldercare sector. Establishing senior care sector investment funds can attract social capital to fuel collaborative industrial chains across services, healthcare and smart eldercare technologies. Supporting research and development in smart care solutions, such as telemedicine and health monitoring systems, will enhance service efficiency and quality.
The nationwide implementation of the private pension system, a key third-pillar component, has bolstered the sustainability of the pension framework by complementing basic endowment insurance and enterprise annuity. Its long-term capital inflows are expected to stabilize capital markets and optimize investment structures. For financial institutions, this shift presents both opportunities and challenges.
Financial institutions should innovate by designing stable, long-term investment products tailored to client risk profiles, streamlining account management processes and leveraging fintech tools to enhance user experience. It is also crucial to conduct investor education campaigns to drive public engagement, alongside data-driven strategies to deliver personalized services.
The views do not necessarily reflect those of China Daily.
The writer is director of the Shanghai Institution for Finance & Development.
