SHENZHEN is among the pilot cities designated by the Ministry of Human Resources and Social Security to carry out a private pension plan, Shenzhen Special Zone Daily reported Saturday.

The ministry said Friday that the plan will be first carried out in 36 cities and regions, including Beijing, Shanghai, Guangzhou and Shenzhen, to supplement the country’s old-age insurance mechanism.

With this new private pension plan, China now has a three-pillar old-age insurance mechanism, with the first pillar covering the national basic old-age insurance and the second pillar covering enterprise and occupational annuities.

People who are covered by the basic old-age insurance for employees or basic old-age insurance for urban and rural residents in Shenzhen can participate in the new private insurance plan on their own, regardless of employment form and region, as well as residence registration. After payment, the insured can purchase pension products that meet their requirements and enjoy preferential tax policies in accordance with relevant national regulations.

According to the Shenzhen Municipal Human Resources and Social Security Bureau, there are three steps to participate in the private pension plan: opening accounts, depositing money and purchasing specific products.

At first, the participants need to open two accounts, namely, the personal pension account and the personal pension fund account. The two accounts can be opened at the same time through commercial banks.

The second step is payment, where the insured can deposit up to 12,000 yuan (US$1,650) per year into the accounts, and payments can be made monthly, yearly or by other structured installment plans. The amount of payment is accumulated in the natural year and recalculated in the next year.

The last step involves the insured choosing to purchase financial products that meet their requirements, such as savings deposits, financial products, commercial pension insurance and public funds.

China Securities Regulatory Commission announced on Nov. 18 that 37 institutions were shortlisted to sell private pension products, including 14 security brokerages, 16 banks and seven independent fund sales institutions.

The private pension fund accounts are operated in a closed way. If the insured meets any of the following conditions, he or she can receive private pension monthly, in installments or lump sum.

The participants must (1) reach the basic pension age, (2) completely lose the ability to work, (3) settle down abroad, and (4) have other circumstances stipulated by the State.

(Windy Shao)