The Financial Sector’s Role in China’s Expanding Silver Economy
China faces one of the fastest aging trends in modern history. Rising life expectancy, improved living standards, and persistently low birth rates are reshaping the nation’s demographic structure. Early 2025 data from the National Bureau of Statistics shows that in 2024, births dropped to 9.54 million while deaths rose to 10.93 million. This marks the third consecutive year of population decline, highlighting an accelerating demographic shift. Currently, 310 million citizens are aged 60 or above, and 220 million are 65 or older.
This so-called “silver tsunami” presents social challenges and requires robust financial strategies. Developing a thriving “Silver Economy” is now crucial. This economy encompasses products, services, and financial systems designed for China’s elderly population. Advanced financial solutions are no longer optional—they are essential for ensuring quality care, supporting retirement security, and fueling innovation in senior services.
At the national level, elder finance became a top priority at the 2023 Central Financial Work Conference. Policymakers recognize that financial tools can directly influence both long-term development strategies and immediate welfare for hundreds of millions of citizens.
China’s elder-finance approach centers on three pillars – pension finance, elder-care service finance, and elder-care industry finance. Together, they create a comprehensive framework for supporting an aging society.
Pillar 1 – Pension Finance
Freepik | Pension finance helps seniors secure a stable income and plan for a safe future.
Pension finance forms the foundation of retirement security. It ensures that retirees have reliable income streams and safeguards long-term wealth. China has implemented a three-pillar pension system, although challenges remain.
Basic Pension Insurance
This universal safety net covers urban employees and urban/rural residents. By the end of 2023, over 1.066 billion people were enrolled—521 million urban workers and 545 million urban/rural residents.
The system holds a combined surplus of ¥7.81 trillion. Yet, the shrinking contributor base, regional disparities, and rising life expectancy create sustainability pressures. Reforms to adjust retirement age and contributions are ongoing.
Enterprise and Occupational Annuities
This employer-based system supplements basic pensions. By 2023, more than 141,700 companies offered enterprise-annuity plans to 31.44 million employees. Total investments reached ¥5.75 trillion.
Despite growth, coverage mainly benefits large state-owned enterprises and public-sector workers. Expanding access to smaller private companies remains a key policy goal.
Individual Pensions
Introduced in April 2022 and fully rolled out by December 2024, individual pensions encourage personal retirement savings. Over 70 million accounts were opened by the end of 2024, but only 30% of account holders actively contribute.
Average contributions remain low, and investment options need improvement. Scaling participation and diversifying offerings are vital for the system to deliver meaningful retirement income.
Pillar 2 – Elder-Care Service Finance
Beyond income security, elder-care service finance provides specialized financial solutions for seniors’ daily needs, healthcare, and lifestyle. This area has grown rapidly, driven by demand for stable income, long-term savings, and protection against health risks.
Pension Insurance and Annuities
These products guarantee lifetime income and cover nearly 100 million consumers. Hybrid products now combine life insurance, long-term care riders, and critical-illness coverage, meeting multiple needs in one plan.
Pension Financial Products
Introduced in 2021, these bank-based wealth-management products offer long-term savings growth with low risk. By January 2024, 11 institutions issued 51 products across 10 cities, attracting 470,000 investors and over ¥100 billion in funds.
Pension Target Funds
Fund-of-Funds products allow professional asset management for retirement. By mid-2024, 274 such funds held 63.2 billion fund units, roughly half of all public FOFs in China. These funds provide diversified, goal-focused growth for individual investors.
Long-Term Care Insurance (LTCI)
LTCI addresses costs linked to age-related disability. Pilots began in 2016 and expanded to 49 cities by 2020. By 2023, 180 million people had coverage, but only 1.34 million had received payouts. The gap highlights challenges in affordability, eligibility, and benefit triggers.
Scaling LTCI nationally is critical, as more than one-third of seniors experience partial or full disability. Current pilots explore social-insurance models, private supplements, and public-private partnerships.
Pillar 3 – Elder-Care Industry Finance
This pillar focuses on financing infrastructure and innovation in the elder-care sector. It supports senior housing, medical care, assistive technology, and home-based services. Despite growth, funding gaps remain.
Equity Financing
Direct capital-market access is limited. By September 2024, only 108 companies on the Shanghai and Shenzhen stock exchanges were involved in elder care, representing less than 2% of listed companies. Encouraging more providers to list and attract investors is a priority.
Bond Financing
Special elder-care bonds have been issued since 2015, but the market remains small and volatile. Only 21 such bonds were actively traded recently. Expanding this market requires standardized structures and improved credit mechanisms.
Credit Support
Bank loans serve as the primary financing method. Major policy and commercial banks provided over ¥100 billion in elder-care loans by March 2024. Long-tenor, asset-based loans help support care facilities, though smaller providers still face challenges accessing affordable credit.
Insurance Fund Investment
Insurers are investing directly in integrated senior-living communities, combining housing with care services. By 2021, more than 130,000 beds were supported across 34 cities. Companies like Ping An Insurance, China Life Insurance, and Taikang Insurance Group lead this trend.
Investment Funds
Public-private partnerships and dedicated investment funds provide growth capital for innovative care models and regional networks. By September 2024, 31 such funds were active, launched by governments, insurers, and industry consortiums.
Innovation and Inclusivity
Freepik | Lifestylememory | China improves elder finance with digital tools and better health coverage.
China’s aging trend is driving a new phase in elder finance, emphasizing systemic improvements, technological disruption, and inclusion.
Closing Protection Gaps
Health and long-term care needs are expanding. Over 40% of seniors face chronic diseases requiring ongoing management. Health insurance must extend beyond hospital coverage to outpatient care, prevention, and geriatric services. Scaling LTCI nationwide remains the top financial priority. Policies must ensure affordability, efficient claims systems, and accessibility for lower-income seniors.
Digital Transformation
Digital finance is central to efficient elder-service delivery. While many seniors now use digital payments, nearly 30%—over 90 million people—remain offline due to usability and trust issues. Improved digital literacy, simplified apps, voice interfaces, and enhanced security are essential. Financial institutions must design seamless, senior-friendly digital services.
Institutional Reform
Sustainable elder finance requires internal reforms in financial institutions. Key actions include creating dedicated elder-finance units, aligning staff incentives with customer outcomes, and developing integrated solutions combining health insurance, pensions, care funding, and housing. Cross-sector collaboration with healthcare and technology providers will further streamline services. ESG-focused investments and impact-driven credit policies will also grow.
Strengthening the Financial Backbone
The ambition is to create a life-cycle financial ecosystem for seniors. This ecosystem would allow citizens to plan, save, and access care with security, convenience, and choice. Bridging pension gaps, expanding personalized care-service finance, and boosting capital investment in high-quality care infrastructure are essential. Digital inclusion and universal protection are both commercial opportunities and societal imperatives.
China’s approach to elder finance is attracting global attention. Solutions developed here—integrating finance, technology, and care for the world’s largest aging population—can guide other nations facing similar demographic challenges.
The financial sector’s role as the key enabler of this transition is more critical than ever, and the potential impact on social stability and quality of life is enormous.