(Yicai Global) Aug 1 — China’s “big four” banks are gearing up to introduce a pilot long-term retirement savings program in five cities that have a longer maturity period than most deposit accounts, up to age 20, better returns and tax benefits to help those planning for their retirement get the most out of their money.
Lenders in Hefei in eastern Anhui province, Guangzhou in southern Guangdong province, Chengdu in southwestern Sichuan province, Qingdao in eastern Shandong and Xi’an in central Shaanxi province will launch the retirement savings pilot project in November, the People’s Bank of China and the China Banking and Insurance Regulatory Commission said recently.
Each saver can deposit a maximum of 500,000 CNY (74,028 USD) in each bank. And each bank will handle a maximum of 10 billion yuan, he said. The pilot project will last for one year.
“You can pay less tax if you buy retirement savings products using money from your retirement account,” Zeng Gang, director of the Shanghai Institute of Finance and Development, told Yicai. Overall. They also have a longer deposit term of five, 10, 15 and 20 years. Normal bank deposits have a maximum maturity of five years.
Yields on retirement savings are likely to be somewhat higher than those on five-year savings bonds as there are unlikely to be any high interest rate assets on 10, 15 and 20 years in the short term, said Zhou Yiqin, general manager of the Department. Research Fellow in Financial Asset Management at Financial Regulation & Law. Recently issued three- and five-year savings bonds have interest rates of 3.35% and 3.52%, respectively.
The CBIRC is also piloting a pension fund management business to provide clients with professional pension advisory services and financial solutions as the country grapples with a rapidly aging population. The regulator is developing guidelines and some well-established insurance companies will soon be trying some products.
Editor: Kim Taylor