Retirement has always been a pain point for the middle class.

Recently, the long-awaited individual pension system has begun to be rolled out nationwide. The Ministry of Human Resources and Social Security, along with four other departments, issued a notice on the comprehensive implementation of the individual pension system, expanding it from 36 pilot cities (regions) to the entire country starting December 15. Many media outlets have interpreted this news as the individual pension being most suitable for the middle class. But is that really the case? How should we view the individual pension system?

Firstly, it should be acknowledged that the rollout of the individual pension system is a step forward. From a macro policy perspective, the nationwide promotion of pensions is undoubtedly a good thing, as the pension system is crucial for the stability of a society, and there is indeed a gap in our pension funds. To define individual pensions, as the name suggests, you can think of it as funding your own retirement, which means saving in a personal designated account for retirement, with an annual limit of 12,000. This is an important supplementary pension system beyond the current social security system, commercial insurance, and corporate annuities. For individuals, the benefit of investing this money is the ability to deduct it from personal income tax. If the personal tax rate is around 10%, one can save 1,200 a year, which is advantageous.