Investors are inquiring about the process of using personal pension funds to buy savings bonds, whether it is financially advantageous, and how taxes are handled upon withdrawal.

On June 10th, two tranches of government bonds issued by the Ministry of Finance were officially listed as specialized products for personal pensions, allowing investors to purchase them using funds from their personal pension accounts.

Operational Process for Purchasing

From an operational standpoint, major commercial banks authorized to underwrite government bonds have now launched online subscription features for electronic savings bonds within the personal pension section of their mobile apps. Investors can view the currently available bond products in this section and, following the provided guidance, open a dedicated electronic savings bond trading account linked to their personal pension account. Subsequently, they can use funds from their personal pension account to make purchases online.

Assessing the Financial Benefits

Regarding whether this is a financially sound decision, for investors who favor government bond products, this development is undoubtedly positive.

On one hand, the quota for personal pension electronic savings bonds is independent and separate from the quota for ordinary personal electronic savings bonds, meaning they do not conflict. This implies that an investor who has already purchased 500,000 yuan worth of bonds in a regular account can still purchase up to an additional 500,000 yuan worth of bonds through their personal pension account, theoretically allowing a combined purchase limit of up to 1 million yuan. However, in practice, the actual purchase amount will be constrained by the cumulative deposit balance in the individual's personal pension account.

On the other hand, with each bond issuance, a portion of the flexible distribution quota is allocated as a dedicated quota for personal pensions. This dedicated quota ensures that investors have more opportunities to subscribe to bond products through their personal pension accounts.

For the broader group of investors who have opened personal pension accounts, savings bonds offer safety of principal, stable returns, and a credit rating that surpasses that of ordinary wealth management products. Including them in the portfolio allows investors to achieve steady appreciation of their "retirement funds" while ensuring the security of their capital.

Taxation Upon Withdrawal

As for the question of how taxes are handled upon withdrawal, the answer is clear: funds used from a personal pension account to purchase savings bonds follow the same rules—a 3% tax is levied upon withdrawal.

Previously, the Ministry of Human Resources and Social Security clarified in a response to media inquiries that, according to the provisions of the "Announcement on the Implementation of Personal Pension Individual Income Tax Preferential Policies Nationwide," when personal pension funds are withdrawn, a 3% individual income tax is levied on the withdrawal amount, with no distinction made between the principal and investment returns.

Some may wonder how this reflects a tax preferential policy.

In fact, personal pensions benefit from a deferred tax preferential policy. During the contribution period, the contributions made by investors to their personal pension fund accounts are not subject to taxation. Furthermore, an annual standard deduction limit of 12,000 yuan can be applied before tax on comprehensive income or business income, providing a certain "tax deduction" effect. Upon final withdrawal, a one-time 3% individual income tax is payable. This tax is calculated separately and is not consolidated with comprehensive income.

Overall Financial Viability Analysis

Given that tax benefits are enjoyed at the time of purchase but a 3% tax is applied upon withdrawal, is this arrangement still financially beneficial for investors after this "inflow and outflow"?

Industry experts have addressed this issue, explaining that despite the 3% tax upon withdrawal, when combined with the tax deduction benefits during the contribution phase, most individuals can still benefit.

"Personal pension investment returns generated in the interim years are temporarily exempt from individual income tax until the final withdrawal. Moreover, in terms of tax rates, while the individual income tax has seven brackets of progressive rates ranging from 3% to 45%, personal pensions are subject to the lowest fixed rate of 3%, reflecting policy support and preferential treatment," said He Daixin, Director of the Fiscal Research Office at the Chinese Academy of Social Sciences' National Academy of Economic Strategy.

However, the degree of benefit from personal pensions varies for different income groups.

Taking Mr. Li, a 34-year-old participant with an annual pre-tax income of approximately 200,000 yuan, as an example, his marginal individual income tax rate is 10%. Considering the 3% tax upon withdrawal of his personal pension, if Mr. Li contributes 12,000 yuan annually, he can deduct 1,200 yuan (12,000 × 10%) from his current taxable income. Setting aside any product returns, he would need to pay 360 yuan in tax (12,000 × 3%) upon retirement withdrawal. Overall, he could "gain" over 840 yuan due to the tax preferential policy. For those subject to a 20% tax rate, the net tax savings could reach 2,040 yuan (12,000 × 17%).

Overall, the higher an individual's income and the higher their current individual income tax rate, the more financially advantageous purchasing personal pension products becomes. For lower-income groups whose wages have not yet reached the monthly 5,000 yuan individual income tax threshold, participating in a personal pension plan may not necessarily be financially beneficial.

Additional Considerations

In addition to the net benefit from tax savings and the withdrawal tax, if suitable financial products are purchased, investors can also obtain long-term investment returns, which should be factored into a comprehensive evaluation.

Calculating Future Tax Liability

Regarding how to estimate one's future tax liability, it is noted that major banking apps now feature specialized personal pension "calculators," allowing individuals to make estimates based on their own income situations.

Data shows that as of the end of 2025, the number of personal pension account openings in China had exceeded 150 million. It is understood that the Ministry of Human Resources and Social Security is collaborating with relevant departments to research and formulate supporting policies for personal pensions, aiming to further enhance the appeal of the personal pension system.