Individuals who pay income tax can open a personal pension account and deduct up to 12,000 yuan per year before tax; it is not worthwhile for non-taxpayers to do so.

For every yuan you deposit, the tax you save equals your marginal tax rate minus 3%. If you contribute the full 12,000 yuan in a year, a taxpayer at a 10% rate saves 840 yuan, at 20% saves 2,040 yuan, and at 30% saves 3,240 yuan. Those who do not pay income tax gain nothing; they must also pay an additional 3% tax when withdrawing funds, resulting in a net loss. The money stays locked until retirement.

There is no fee to open the account. The real cost is that the funds remain locked until retirement — you cannot withdraw them during that time.

The maximum annual contribution of 12,000 yuan can be fully deducted from your total taxable income — whether from wages or business earnings. Any investment returns generated within the account are exempt from personal income tax for now. When withdrawals occur, they are taxed separately at a flat rate of 3%. Thus, the total tax saving equals your marginal tax rate minus 3% multiplied by the actual amount contributed. For example, at a 10% marginal rate you save up to 840 yuan per year; at 20% the saving is 2,040 yuan, and at 30% it reaches 3,240 yuan. Non‑taxpayers receive no benefit now and must pay 3% tax later, making it a net loss. The annual contribution limit resets each calendar year; any unused portion cannot be carried over. This policy has been in effect nationwide since 15 December 2024.

This account operates on a closed‑loop basis — once funds are deposited they cannot be withdrawn except under four specific circumstances: reaching the statutory retirement age, becoming completely unable to work, emigrating, or as otherwise stipulated by law. It is therefore not a typical investment vehicle but a long‑term tax‑saving arrangement. Before contributing, calculate how much extra tax you would pay per additional yuan earned to determine an appropriate amount. Avoid using emergency savings for this purpose (see Section 27). You must also select your own investment products; losses are possible. Selection criteria mirror those outlined in Sections 17 and 18 of this chapter — broad‑based index funds with low fees are preferred. Proof of deductions is issued by the Personal Pension Information Management Service Platform. You may elect to claim the deduction either at the time of payroll withholding or during the annual tax reconciliation process (see Section 2).

财政部、税务总局 (2024). 关于在全国范围实施个人养老金个人所得税优惠政策的公告（财政部 税务总局公告 2024 年第 21 号，2024 年 12 月 12 日）. https://www.gov.cn/zhengce/zhengceku/202412/content_6992498.htm；人力资源社会保障部等五部门 (2022). 个人养老金实施办法（第七、八、九、十二、十三条）. https://www.gov.cn/zhengce/zhengceku/2022-11/05/content_5724783.htm；全国人民代表大会常务委员会 (2018). 中华人民共和国个人所得税法（2018 年第七次修正，个人所得税税率表一）. http://www.npc.gov.cn/zgrdw/npc/xinwen/2018-09/05/content_2060671.htm