【Pension Planning Trusts for SME Owners: A Retirement Safety Reservoir】

Mr. Qian runs a small, family-owned manufacturing business.

Most of his assets are tied up in the company’s operations — including the factory premises, equipment, and accounts receivable. While the business is moderately profitable, cash flow remains unstable, and Mr. Qian has not made sufficient contributions to the social security pension system.

He worries that relying solely on a future sale of the business or financial support from his children may not provide a stable and adequate retirement.
He hopes to build a "retirement fund" that is insulated from business risks, ensuring both quality of life and financial independence in his later years.

To achieve this, Mr. Qian established a Supplementary Pension Trust.
Over three years, he allocated approximately RMB 5 million in personal lawful income—drawn from company profits—into the trust.

Based on his conservative-to-moderate risk appetite, the trustee designed an investment portfolio primarily composed of:

• High-credit-rating bonds

• Stable mutual fund products

• A small portion of high-quality commercial real estate REITs

According to the trust terms:

• Beginning at age 65, Mr. Qian will receive a fixed monthly pension payment of RMB 20,000 from the trust.

• In the event of a major illness or long-term care needs, he may apply for additional disbursements.

• The trust principal and income are intended to be fully disbursed over the lifetimes of Mr. Qian and his spouse.

Using a Family Trust to Create a Stable Retirement Cash Flow for SME Owners

• Advance planning of business profits: By locking in a portion of profits through the trust, Mr. Qian creates a retirement reserve independent of business risks.

• Stable retirement income: The trust ensures a predictable income stream, unaffected by company performance or succession uncertainties.

• Professional and prudent investment management: The trustee manages the funds conservatively to counter inflation and maintain the long-term purchasing power of the retirement payouts.

• Quality of life assurance: The trust provides a steady cash flow that matches Mr. Qian’s desired standard of living in retirement.