(Yicai Global) March 16 -- Shanghai authorities aim to launch pilot operations of an income-tax deferred pension scheme as soon as possible, as part of efforts to encourage residents to save money for their old age.

The eastern Chinese city's municipal government called on pensions institutions to proactively explore innovations related to pilot operations in a statement.

Under the proposed scheme, individuals would be allowed to defer tax on the portion of income used to buy commercial pension insurance. They would be able to draw from the fund upon retirement.

Plans for the pilot scheme have been approved though the specific implementation measures are still in development, said China Insurance Regulatory Commission Vice-Chairman Huang Hong in a recent interview, adding that any qualified insurance company will be permitted to undertake pilot operations.

The long-anticipated pilot scheme is a possible means of dealing with the country's aging population, while also enhancing the sustainability of the pension system.