China on Thursday announced the expansion of a private pension scheme from 36 pilot cities and regions to the entire country, effective from Dec. 15.

Serving as supplementary pension insurance, this scheme is voluntary for individuals and operated in a market-oriented manner with support from national policies, according to a notice jointly issued by five government departments including the Ministry of Human Resources and Social Security.

People who currently contribute to basic pension schemes for urban employees, non-working urban residents and rural residents can all participate in the private pension scheme, according to the notice.

The scheme allows participants to contribute up to 12,000 yuan (about 1,670 U.S. dollars) annually to their private pension accounts, and offers them tax incentives.

The private pension mechanism will complement the country's current pension system consisting of the basic old-age pension and enterprise annuities as well as commercial insurance for the elderly, offering another layer of support for China's aging population, analysts say.

China is taking measures to address the challenges brought about by the aging population. By the end of 2023, the number of Chinese people aged 60 or above had reached 296.97 million -- accounting for 21.1 percent of the country's total population.

The private pension scheme, launched in November 2022, was piloted in 36 cities and regions including Beijing, Shanghai and Guangzhou.

More than 70 million private pension accounts have been opened under this scheme so far, while the number of investment products has exceeded 800.

Financial products, such as wealth management products, savings deposits, commercial pension insurance and public funds, have been offered under the scheme.

According to the notice, China will launch more investment products under the scheme, including treasury bonds, index funds and specific retirement savings.

Shortly after the issuing of this notice, the China Securities Regulatory Commission revealed that the first batch of 85 equity index funds had been included in the investment product catalog for the private pension scheme.

The inclusion of equity index funds can help form a rich and differentiated product portfolio and enhance the attractiveness of the private pension scheme, the commission explained.

The notice also stipulates circumstances under which early withdrawal of funds from private pensions will be allowed.

In addition to people reaching the age qualification for receiving the basic pension, those completely unable to work, and people settling outside China, participants who suffer from serious illnesses, meet certain conditions for receiving unemployment insurance benefits, or are currently receiving subsistence allowances may also apply for early withdrawal of funds.

"Boosting the flexibility of the scheme when it comes to withdrawals can put participants' minds at ease about the future," said Sun Bo, an expert with Principal Financial Group.

"Also, it can motivate them to engage more enthusiastically and have confidence in committing to long-term investments," Sun added.