China to expand private pension withdrawal options

BEIJING -- China will expand the circumstances under which individuals can withdraw funds from their private pension accounts starting Sept 1, according to a circular released by the Ministry of Human Resources and Social Security and four other government organs.

The new policy aims to enhance the flexibility of the private pension system, allowing withdrawals in situations such as high personal or family medical expenses and long-term unemployment.

According to the circular, individuals may withdraw funds if their own, their spouse's, or their minor children's out-of-pocket medical expenses within the past year exceed the previous year's per capita disposable income in their provincial-level region.

Withdrawals will also be permitted if applicants have received unemployment insurance benefits for a cumulative 12 months within the past two years or if they are currently receiving minimum living allowances for urban and rural residents.

Previously, private pensions could only be withdrawn if participants had reached the statutory retirement age, had completely lost the ability to work, or had settled abroad.

This marks a shift from pensions serving solely as a retirement income tool to also helping ease financial burdens during major life events, such as illness, said Lu Quan, professor at the School of Labor and Human Resources at Renmin University of China.

According to the circular, except for those who have reached the statutory retirement age, individuals who withdraw funds under the newly added conditions may continue contributing to their private pension accounts based on their financial circumstances.

China's private pension scheme was initially piloted in selected cities in November 2022 and expanded nationwide by the end of 2024.