More financial tools needed to cope with challenges of aging population

More financial tools should be introduced to make better use of pensions and to confront challenges brought by an aging population in China, experts said.

"As the proportion of people aged 65 and above keeps growing, the aging population is expected to occupy 30 percent of our total population, and then the status will stay stable for a long time. It will pose a great challenge for pensions," said Dong Keyong, a professor at the School of Social Sciences of Tsinghua University, and secretary-general of the Ageing Finance Forum 50, at an insurance conference on Tuesday.

Currently, there are three major pillars of the pension insurance system in China: The State-run fundamental insurance, enterprises’ annuities provided by employers and commercial pension insurance.

"The second and third pillars should further develop to accelerate accumulation of pensions, to meet the challenges of the aging population," Dong said, adding the awareness of an increasing wealth reserve for old age should be enhanced to spur demand for related financial services.

Financial institutions – banks, securities, insurance and trust companies – can also develop more products to serve the consumption of pensions, such as a reverse mortgage. "When elderly people lose capability to manage their financial assets, the importance of aging finance is manifested. But currently the supply of such services is lacking," he said.

Dong also suggested providing more support to companies in the elderly-care industry, such as in financing, to help them issue and float bonds, and in mergers and acquisitions.