Abstract: The impact of population aging on the economy is systemic, endogenous, and long-term. From a supply and demand viewpoint, as industries undergo the age-friendly transition, new demands will emerge to generate new supplies, which will in turn open up new space for demands, creating new drivers of growth and scaling up the silver economy in this process. But in reality, to achieve this closed loop of supply and demand, we need to take into account the pension security system. If there is only industrial and supplyside policy support, and the willingness and capacity of the elderly population to consume are low on the demand side, “needs” will not be effectively transformed into “demands,” and implicit demand will remain implicit. Without effective demand, the development of the silver economy will be hindered.
Within the multi-tiered and multi-pillared pension security system, the first pillar has largely been “playing solo” due to the negligible roles played by the second and the third pillars—the number of employees participating in enterprise annuity are small and the scheme has faced bottlenecks since entering the new normal, whereas the development of the private pension scheme, which is still being piloted, has been significantly constrained by the performance of the capital market.
An effective account-based pension system, represented by private pensions, builds not only on continuous improvements in the design and institutional set up of the system itself, but also on the better and healthier development of the capital market. Without an active capital market, the private pension scheme risks being populated by “inactive participants” and rendered an “inert” third pillar that does nothing to raise elderly income. A robust capital market not only fosters the development of private pensions but also promotes the growth of the silver economy. Serving as a foundational social infrastructure for the well-being of senior citizens, it is a vital component of the supply-demand loop in the silver economy．
