Despite significant reform and growth, China’s pension system is facing serious challenges in the coming decades.

Demographic changes and greater automation of labour could see a declining number of people engaged in the workforce and contributing to the pension system. In combination with the global macro-economic environment, these changes pose a threat to China’s economic objectives and may result in funding gaps across all three pillars of the Chinese pension system. These pillars are; I. The national mandatory social security pension system; II. Workplace pensions; and III. Voluntary individual pension products currently without tax incentives.

In response to these issues, the Chinese government has announced it will introduce reforms to all three pillars of its pension system, including the gradual lifting of investment restrictions on pension funds. Of particular interest are the anticipated reforms to Pillar III, which include a pilot project for launching tax-deferred pension products.

This paper suggests that China can capitalize on the anticipated reform of Pillar III by leveraging the potential of fintech — innovations in the financial sector that are transforming how people use financial services — in the pension sector. Pension-tech has the potential to multiply the benefits of a robust private pension market for the Chinese government and its citizens.

Because of its existing leadership position in fintech, China is ideally positioned to apply its expertise to the retirement sector. Through these innovations, China can catalyze pension reform. The benefits of leveraging pension-tech include:

·  Educating people on the need to save for retirement

·  Increasing participation in pension schemes

·  Reducing costs through increased competition and efficiency

·  Learning about the behaviours and habits of customers

·  Increasing transparency and accountability in the pension sector

As China addresses the challenges it is facing and builds a world-class pensions system with Chinese characteristics, it will need to collaborate and incorporate the experience and global best practices of other successful jurisdictions. In addition to pension-tech, China’s pension market could also benefit from policy changes that would allow foreign companies to participate. Experienced global firms that project stability, strength and trustworthiness are well positioned to enable China to achieve its goal of a “moderately prosperous society.”

Pension reforms, aided by fintech and the experience of global firms, provide an opportunity for a win-win for the Chinese government and for its people.