China launches trial of special pension savings in five cities, maximum rates at 4%

Trials of special pension savings products have begun in five cities across China amid efforts to boost the development of China’s pension sector.

Starting November 20, major state-owned banks, including the Agricultural Bank of China (ABC), the Bank of China (BOC), the China Construction Bank (CCB) and the Industrial and Commercial Bank of China (ICBC), began nationwide trials of special retirement savings products. five Chinese cities.

The five Chinese cities include Hefei, the capital of Anhui Province, Guangzhou, the capital of Guangdong Province, Chengdu, the capital of Sichuan Province, Xi’an, the capital of Shaanxi Province, and Qingdao, the city of Shandong Province.

The trials are planned to be conducted for one year, with individual banks allocating a quota of up to and including 10 billion yuan.

ICBC has already started selling products, while ABC, BOC and CCB will start operations soon.

ICBC said the special savings products it is offering as part of the trial will include three types – full deposit and full withdrawal, zero deposit and full withdrawal and full deposit and zero withdrawal. The products under the trial will cover four maturities, including five years, 10 years, 15 years and 20 years.

In accordance with Securities Dailythe interest rates on these products are slightly higher than the advertised interest rate on five-year term deposits at large state-owned banks.

“We currently offer a total of 12 pension savings products,” said a source at ICBC’s Chengdu branch. “Different products have different requirements for different age demographics and different corresponding interest rates.

“The maximum interest rate can reach 4%.”

“For our special retirement savings products, people aged 35 and over can buy a 20-year, people over 40 can buy a 15-year, people over 45 can buy a 10-year and people over 50 can buy a five-year,” – said another source at the Hefei branch of a major state-owned bank.

“For the five-year product, the rate is currently 3.5%, which is higher than the rate on the 3-year large certificate of deposit and the rate on the 5-year government bond.”

Ming Ming (明明), chief economist of China CITIC Securities, said the trials would help smooth out kinks in pension funding reforms.

“Preliminary testing will help identify problems, make improvements promptly, scale up testing depending on circumstances, and eventually lead to full implementation,” Min said.

“This will contribute to the stable development of pension fund savings and support the development of China’s pension system.

“In the process of testing, the bank will need to continuously accumulate experience, improve the design of pension savings products and continue to add different types of pension savings products with different maturities to meet the diversified retirement needs of the masses. »