Some media reports say Shanghai will launch a pilot program for progressive old-age insurance as an important part of income tax reform before the end of the year.

According to the program, if individuals purchase commercial old-age insurance, the premium they pay will be deducted from their income tax base until they retire and get old-age pension. The deduction from the income tax is equal to getting money from the government for old-age pension.

The pilot program will be launched 10 years after it was designed, because it will greatly increase the government's fiscal expenditure. The government already faces huge fiscal revenue pressure, and the program will further reduce its income tax revenue.

But since China also faces an aging society, the government is under great pressure to provide support for senior citizens. That's why it is necessary to implement the income tax reform and old-age insurance pilot program.

According to a Chinese Academy of Social Sciences report on China's old-age pension development in 2015, the gap in urban employees' basic pension insurance was as high as 1 trillion yuan ($150 billion). The move could encourage individuals to purchase commercial old-age insurance, as well as support China's old-age security system.

The pilot program should be promoted nationwide, but the authorities should guarantee fairness in its implementation. More importantly, integrating the urban and rural pension insurance systems should be the goal of old-age insurance program.