China's Three-Pillar Pension Insurance System: How the Third Pillar Complements the Gap in the First Pillar

This paper explores the functional positioning and implementation path of the third pillar in China's pension system to address the funding gap in the first pil-lar. The study finds that China is facing severe population aging, with the re-placement rate of the first pillar continuously declining and the fund's return rate remaining low, making it difficult to cope with the payment pressure brought by an elderly population exceeding 30% in the future. Although the third pillar started late, it has the potential to supplement the lack in the first pillar through market-based investment, tax incentives, and an account accu-mulation system. However, the third pillar faces challenges such as high account opening rates but low contributions, limited investment products, and low re-turns. Drawing on international experience, this paper proposes policy recom-mendations such as optimizing tax policies, diversifying investment products, and enhancing public recognition to provide decision-making references for building a multi-tiered pension security system in China.