At the executive meeting of the State Council held on 26 September 2022, China announced that it will offer individual income tax incentives for private pensions that are supported by policies and operated commercially. The tax incentives are as follows:

1. Participants in private pension scheme are entitled to a deduction of up to RMB12,000 each year from their annual taxable income.
2. Income from investments will not be taxed for the time being.
3. The actual tax burden for receiving pension benefits will be lowered from the previous 7.5% to 3%.
4. The policy will be implemented retroactively from 1 January 2022.

The above tax incentives are made and offered in accordance with the Opinions of the General Office of the State Council on Promoting the Development of Private Pension (hereinafter referred to as the Opinions) issued by the General Office of the State Council on 21 April 2022. China will launch a private pension scheme according to the Opinions. The scheme will be implemented in certain pilot cities for one year first and then gradually expanded. Employees who participate in the basic pension insurance for urban employees or the basic pension insurance for urban and rural residents in China can take part in the private pension scheme. The government will offer tax incentives to encourage participation in the scheme.

At present, the maximum amount of private pension that can be contributed by the participant is RMB12,000 each year under the private pension scheme. The funds in the private pension account of the participant can be used to purchase financial products, such as bank wealth management products, savings deposits, commercial pension insurance, public funds, etc. Participants can draw the money from their accounts on a monthly basis, in batches, or all at once when they reach the legal retirement age, completely lose their ability to work, settle abroad, or meet other conditions set by the relevant regulations.

The pilot cities for the private pension scheme have not been officially announced. And the implementation rules for the private pension scheme have not been released as well.

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