Ageing Societies: China in Comparative Perspective

Except for Africa, the whole world seems to be ageing, with fertility rates falling below replacement levels and people living longer. The challenges this creates are well rehearsed, and it is also well known that the ageing population wave is breaking first in East Asia - initially in Japan, and soon after in China.

I was recently in China, and in discussions on health insurance, life insurance, and pensions, the “ageing population” loomed large. Fortunately, the Chinese mindset is to confront problems directly and find solutions. I found an impressive willingness among both state and private players to innovate and prepare for the future.

Indeed, the 15th Five‑Year Plan, due to start in April 2026, signals a shift towards deeper integration of insurance into social welfare and economic resilience. This has the potential to drive significant expansion in pensions and private health insurance.

It is useful to compare China with its East Asian neighbours, and I have chosen Japan and Thailand for this purpose. Japan is a natural comparator, having dealt with these issues for much longer, while Thailand has an age profile similar to China’s.

Country	Median Age (years)	Population Aged 65+ (%)	Total Fertility Rate (children per woman)	Standard Retirement Age (years)
China	40.1	~14–15%	~1.1–1.2	60 (men), 55 (women)
Japan	49.5	29.5%	1.3	65
Thailand	40.6	~15–16%	~1.1–1.3	60

Solidarity and Systemic Response

China’s main advantage in addressing this challenge lies in the unified sense of societal purpose it brings. Government direction aligns state‑owned and private‑sector businesses, enabling them to act quickly and in concert. Japan exhibits a different form of solidarity: decision‑making can take longer, but once a course is set, it is pursued with great determination.

In China, with strong government prompting, the insurance and pensions sector is expanding beyond traditional life and health products into more integrated longevity‑risk solutions. The market response blends regulatory pressure, product innovation, and ecosystem partnerships.

When it comes to incentives, China relies much more heavily on subsidies than tax relief. Local governments, in particular, offer premium subsidies of 30–50% for certain medical and critical illness policies. This makes such insurance exceptionally attractive on a price basis, and notably, there are often no exclusions for pre‑existing conditions.

On the tax side, there is some deferred tax relief on pension contributions, which has now been extended to long‑term care (LTC) premiums, although benefits remain taxable.

A Surge in Long‑Term Care (LTC) Solutions

Commercial LTC policies grew by 45% year‑on‑year in 2024, and over 60 million people are now covered by government‑backed LTC pilot schemes across 49 cities. Hybrid product offerings are emerging from major insurers such as China Life, Ping An, and Taikang, bundling LTC coverage with annuities and critical illness insurance.

Here again, subsidies and tax incentives play an important role. Local governments in Shanghai, Beijing, and Guangdong offer premium subsidies of 30–50%, and in some areas tax‑deferred pension products can be extended to cover LTC.

Insurance for Chronic and Elderly Care

Critical illness (CI) policies have been upgraded to cover conditions such as Alzheimer’s, Parkinson’s, and long‑term rehabilitation. There is no formal upper age limit for CI insurance, although it is difficult to initiate coverage after age 55. Many policies still cover pre‑existing conditions, and well over 200 million people are now insured.

Alongside this, high‑end medical networks, such as Cigna, AIA, Taikang, and Ping An Health, are competing to build senior‑focused clinics and telemedicine platforms. Ping An’s “Good Doctor” app alone serves around 10 million elderly users.

The Silver Economy and Ecosystem Integration

Taikang Insurance Group is pioneering the integration of insurance with senior living. It operates over 30 Continuing Care Retirement Communities (CCRCs) with embedded insurance solutions, where residents fund care through annuity drawdowns. Ping An is also rapidly expanding its presence in this space.

Huawei and insurance giant PICC have introduced smart ageing wearable devices that feed real‑time health data into dynamic premium pricing and preventive interventions. China Life is piloting reverse‑mortgage products linked to in‑home care services and insurance.

While fewer than 10 million people are currently covered by these innovative offerings, compared with a population of over 300 million aged 65 and above, demand is strong, and adoption is accelerating.

More broadly, China tends to favour technology‑led solutions, often supported by state‑run data platforms. These are already playing a major role in claims handling, AI‑assisted diagnosis, and the optimisation of treatment protocols. Robotics are also increasingly prominent.

Long‑Term Savings and Pensions

The first “third‑pillar” personal tax‑deferred pension accounts, launched in 2022, reached RMB 100 billion in assets by mid‑2025. Insurers dominate distribution, but this remains a relatively small component of the overall system. Incentives are widely seen as “better than nothing”, but insufficient to materially change behaviour.

Commercial annuity sales rose by 60% in 2024, with guaranteed‑income products aimed at pre‑retirees leading the growth. Enterprise annuities remain largely confined to state‑owned enterprises, with assets under management of CNY 3.2 trillion, of which around 40% are managed by insurers.

Despite this, pension provision remains inadequate. This helps to explain China’s exceptionally high household savings rate, over 30%, far higher than in Japan or Thailand, and also sheds light on the surge of funds flowing into savings‑based life insurance products in 2024.

Japan

Japan’s response may be less ambitious technologically, but it is far more mature. As early as 2000, the country introduced Kaigo Hoken, a mandatory public long‑term care insurance scheme. The government has since promoted private‑sector solutions through a combination of tax incentives, regulatory relief, and product standardisation.

Japan employs powerful incentives, full tax deductibility, tax‑free benefits, regulatory fast‑tracking, and lower solvency capital charges to make private LTC insurance and senior‑care savings products attractive to both consumers and insurers.

As a result, the LTC sector is well developed, with strong capacity and investment. In terms of solidarity, Japanese society has embraced the need for longer working lives: 34% of people aged 70–74 remain in employment.

Thailand

Thailand is also facing rapid population ageing and has focused primarily on medical and senior care. It relies on the Universal Coverage Scheme (UCS) for basic public healthcare, covering 99% of citizens, including 47 million people in the informal and low‑income sectors, through tax‑funded programmes.

To supplement the UCS in areas such as senior care, LTC, and retirement savings, the government promotes private insurance through tax relief (up to THB 200,000 per year), regulatory support, and market‑expansion initiatives. As a result, private medical insurance now accounts for 15–20% of health spending.

Private health insurance has grown at more than 13% annually in recent years, with major insurers such as Muang Thai Life and AIA offering senior‑focused plans that cover pre‑existing conditions and medical repatriation.

In terms of capacity building, Thailand offers tax incentives for investment in hospitals and care services, alongside a strategy to position itself as a global medical hub. By attracting medical tourists and expatriates, the country aims to strengthen domestic medical and LTC capacity through externally generated demand.