Individuals paying income tax at a rate of 10% or higher can open a private pension account; up to 12,000 yuan per year can be deducted from taxable income. For those paying no tax or only a 3% rate, opening such an account is not worthwhile

Cost: There is no fee to open the account. The real cost is that the funds remain locked until retirement — they cannot be withdrawn in the interim.
In plain terms: For every yuan you contribute, the tax you save equals your marginal tax rate minus 3%. If you contribute the maximum 12,000 yuan annually, someone at a 10% rate saves 840 yuan, at 20% saves 2,040 yuan, and at 30% saves 3,240 yuan. Those paying only 3% tax end up paying that same 3% again when they withdraw funds, essentially locking their money away for no net benefit. Likewise, individuals who pay no tax must pay 3% upon withdrawal, resulting in a net loss.
Benefit: Contributions up to 12,000 yuan per year can be fully deducted from your total taxable income — the amount you deposit reduces your taxable base exactly by that amount. Any investment returns generated within the account are exempt from personal income tax for now. Upon withdrawal, those returns are taxed separately at a flat 3% rate, rather than being added to your overall income. Consequently, your total tax savings equal (your marginal tax rate minus 3%) multiplied by your actual contributions. Marginal tax rate refers to the percentage applied to each additional yuan earned. In practice, those at a 10% marginal rate save up to 840 yuan yearly; at 20%, up to 2,040 yuan; at 30%, up to 3,240 yuan. People whose total annual income stays below the tax threshold gain nothing from contributing, and actually incur a 3% penalty upon withdrawal. Likewise, individuals whose marginal rate is only 3% receive no net advantage. This rate applies to anyone whose annual income after deductions remains at or below 36,000 yuan. For them, the 3% tax saved at contribution is exactly offset by the 3% tax due at withdrawal, leaving their funds locked for no reason. Keep in mind that paying income tax each month does not necessarily mean you fall into the 10% bracket; it depends on your total annual taxable income. The annual contribution limit resets each calendar year and cannot be carried over. This policy has been implemented nationwide since 15 December 2024.
Evidence grade: A
Sources: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
Notes: This account operates on a closed system — once funds are deposited, they cannot be withdrawn except under four specific circumstances: reaching retirement age, becoming totally disabled, 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 exactly how much tax you would pay on each additional yuan you earn. Avoid using emergency savings for this purpose (see item 27). You must also select suitable investment products within the account; there is risk of loss. Selection criteria mirror those outlined in items 17 and 18 of this chapter: broad‑based index funds with low fees are preferred. Proof of deduction is issued by the Private Pension Information Management Service Platform. You may choose when to apply the deduction — either at the time of monthly payroll withholding or during the following year’s tax reconciliation (see item 2). 〔1.7〕