This experiment of reverse mortgage insurance in four large cities can be regarded as a supplement to the current basic old-age insurance system, and it can both ease the imbalance of pension funds and meet some people's personalized needs to improve their retirement living standards.

Trial of reverse mortgages gets green light

China reports pension funds surplus

A similar model was used in France 300 years ago, people would get a pension until their death from properties based on loan contracts with banks. And this program being trialed in China actually originated in the Netherlands.

But such a new pension model can only be an additional option even in Western countries, and its role can never be exaggerated as a means to solve all the problems related to pensions.

In fact, the pension situation should be correctly and fully recognized. For the government, its primary task is to improve the current basic old-age insurance system and fill in the gaps between the pension fund and the growing needs of the elderly in China. For example, the profits provided by State-owned companies can contribute to the financing gap in the national pension fund, and the large-scale foreign exchange reserve can help as well.

Moreover, the government should make efforts to ensure fairness in pension payments among various groups, especially by establishing a fair and coordinated system that covers both urban and rural areas and strikes a balance between civil servants and company employees.

Finally, we should pay more attention to the potential risks in China's real estate market since in the houses-for-pensions model it is closely related to the well-being of the elderly.

But fundamentally, to meet the needs of China's aging society and ensure greater fairness it is necessary to reform the whole pension system as soon as possible.

The author is a researcher at the China Finance Think Tank.