Revitalizing pensions and economy with innovative aging finance

Editor's note: Wang Xiangnan, deputy director of the Insurance and Economic Development Research Center at the Chinese Academy of Social Sciences. The article reflects the author's opinions and not necessarily the views of CGTN.

Financial institutions actively manage the Basic Old-age Insurance Fund and the National Social Security Fund, adopting market-oriented, diversified, and specialized investment principles. This approach promotes appreciation in the first pillar of the pension system.

These institutions not only handle the investment aspects of enterprise annuity schemes and occupational annuity schemes but also provide direct services to participants in processes such as account opening, migration, and withdrawal. This approach leads to continual expansion in coverage and fund growth in enterprise annuity schemes, and stable operation of occupational annuity schemes, thereby advancing the second pillar of the pension system.

Banks, insurance companies, and fund companies have launched qualified investment products, yielding impressive results in the first pilot year of personal pension schemes. Simultaneously, financial institutions have enhanced the retirement protection offered by commercial personal insurance products and other personal financial products outside of personal pension schemes. These efforts have significantly expanded the third pillar of the pension system.

Developing aging finance activities motivates residents to engage in long-term savings, creating a stable, low-cost pool of investable funds. Well-developed aging finance activities and abundant long-term capital go hand in hand. Financial institutions engaged in aging finance possess strong governance structures, rational investment philosophies, and a commitment to long-term value, steering clear of speculative trading. Thus, funds from pension finance activities serve as a stabilizing force in the financial market.

Moreover, developing aging finance enhances capital supply, optimizes labor mobility and allocation, supports research and development, fosters innovative applications, and limits high-pollution and high-energy consuming projects, directly promoting high-quality economic development. Concurrently, it reduces government debt, adjusts national income distribution, alleviates poverty among elderly residents, improves intergenerational economic relations, and encourages the adoption of long-term-oriented values in society, indirectly fostering high-quality economic development.