China’s Life and Pensions Markets Face Up to an Ageing Population – How is China dealing with it and comparisons with Japan and Thailand

With the exception of Africa it seems, the whole world is ageing, with fertility rates falling to below replacement 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, in Japan, but very soon after in China.

I was recently in China, and in all discussions of health insurance or life and pensions, the “ageing population” loomed large.  Fortunately, the Chinese mindset is to confront problems and find solutions, and I found an impressive willingness by both the state and private players to find innovative ways of facing the future.

It is useful to compare China with East Asia neighbours and I have chosen Japan and Thailand for this.  Japan is always a good comparator since it has dealt with the issues for longer already, and Thailand has an age profile similar to China.

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

China’s main advantage in dealing with this challenge is the unified societal purpose it brings, harnessing government direction to state and private sector businesses acting as one, and acting quickly.  Japan has a different kind of solidarity, takes time to decide its pathway, but also acts with great purpose.

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

When it comes to tax incentives and subsidies, China’s government is much bigger on subsidies.  Local governments by contrast are giving premium subsidies for some medical and critical illness insurance of up to 30% to 50%.  This makes such insurance exceptionally attractive in terms of price, and there are no bars on pre-existing conditions.

As for tax, there is some deferred tax relief on pension contributions, and this has now been extended to LTC premiums, but benefits are still taxed.

A surge in Long-term Care (LTC) Solutions

Commercial LTC policies grew 45% YoY in 2024, and over 60 million people now covered by government-backed LTC pilots in 49 cities.  Hybrid product offerings are now emerging from major insurers, like China Life, Ping An, and Taikang  who bundle LTC with annuities and critical illness covers.

Again, there are subsidies tax incentives.  Local governments in Shanghai, Beijing, and Guangdong offer 30–50% premium subsidies;  and on a local basis, tax-deferred pension products can be extended to cover LTC.

Insurance for Chronic and Elderly Care

Critical illness (CI) coverage upgrades mean that policies now cover Alzheimer’s, Parkinson’s, and long-term rehab.  There is no upper age limit for CI insurance, although it is difficult to start coverage after age 55.  Likewise many policies still cover pre-existing conditions.  Well over 200 million people are covered.

In addition, high-end medical networks such as Cigna, AIA, Taikang and Ping An Health compete to build senior-focused clinics and telemedicine platforms (Ping An’s Good Doctor app serves 10 million elderly users).

Silver Economy Ecosystem Integration

Taikang Insurance Group is pioneering the fusion of insurance and senior living.  It operates over 30 CCRC (Continuing Care Retirement Communities) with embedded insurance. Residents pay via annuity drawdowns.  Ping An is also rapidly expanding its offering in this area.

Huawei and insurance giant PICC have introduced smart ageing wearable devices which feed real-time health data for dynamic premium pricing and preventive interventions.  China Life is piloting reverse mortgages tied to in-home care solutions and insurance.

The numbers covered by these innovative products are still under 10 million, compared to the 300 million people over 65.  Nonetheless, demand is very high, and adoption is proceeding quickly.

In general, China tends to look for technology solutions to its challenges and often provides state-run database platforms.  These are already helping hugely in claims handling, AI diagnoses, optimal treatment protocols.  Robotics are also to the fore.

Long-term Savings

The first third pillar personal tax-deferred pension accounts (launched 2022) reached RMB 100 billion in assets by mid-2025. Insurers dominate distribution, but this is still a small part of the picture, with the incentives regarded as “better than nothing” but too weak to make a difference.

Commercial annuity sales were up 60% in 2024 with guaranteed-income products targeting pre-retirees to the fore.  Enterprise annuities are almost exclusively for state-owned enterprises and assets under management were CNY 3.2 trillion, with insurers managing 40% of funds.  Still, pension provision

Japan

Japan’s response is less ambitious perhaps in terms of technology, but certainly more highly developed.  As early as 2000, Kaigo Hoken mandatory public LTC insurance was introduced. The  government promotes private-sector products through a combination of tax incentives, regulatory relief, and product standardisation. 

Japan uses very strong tax incentives (full deduction + tax-free benefits), regulatory fast-tracking, and lower solvency capital charges to make private long-term care insurance and senior-care savings products extremely attractive both for consumers and for insurers’ balance sheets.

One result has been that the LTC sector of the economy is relatively highly developed with good capacity and investment. 

In terms of solidarity, Japan people have embraced the imperative to look after themselves and expand the workforce. The Japanese now work to a more advanced age than most countries, with 34% of 70-74 year-olds still in employment.

Thailand

Thailand also faces a rapidly ageing population and has focused mainly on medical and senior care.  Thailand relies on its Universal Coverage Scheme (UCS) for basic public health access, covering 99% of citizens, including 47 million in the informal and low-income sectors, via tax-funded schemes.  To supplement UCS in senior care, LTC and retirement savings, the government promotes private insurance through focus on tax relief (up to THB 200,00 a year), regulatory support, and market expansion, driving private medical penetration to 15-20% of health spending.

Private health insurance has grown at over 13% annually in recent years, with major insurers (Muang Thai Life, AIA) offering senior plans covering pre-existing conditions and repatriation. 

In terms of capacity building, there are tax incentives to invest in hospitals and services, but also a strategy to build “Thailand as a medical hub” encouraging tourists and expats to spend their dollars and euros on medical care in Thailand.   This is essentially a strategy to strengthen medical and LTC capacity by building demand.