China is considering launching a new retirement savings programme similar to US 401k plans, the country's state media has reported.
China hopes the scheme will help attract more long-term investors to the securities market and protect individual wealth from the effects of inflation, the Shanghai Securities News said.
One of its unnamed sources claimed a report into the plan suggested making it compulsory for listed companies to issue dividends to offer stable revenue for long-term investors, while another source said China should draw up tax incentives to encourage pension and insurance funds to put more money in domestic capital markets.
"The development of the US capital market in recent decades has been completely reliant on the continued inflows of money from the country's long-term (investment) funds and long-term institutional investors," the report said.
The 401k scheme in the US allows employers to help workers save for retirement, while reducing their taxable income while they are working, though taxes are paid when the funds are drawn down on retirement.
However, the report admitted there would be difficulties, suggesting launching 401k plans in China would require reforms in the country's economic and political institutions by the central government.
China began overhauling its national pension system in the 1990s amid increasing fears about its ageing population. It currently offers a basic pension required by the law, voluntary company pensions and commercial pensions offered by insurers.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.