Two banks and one insurance company are to become the first State-owned enterprises (SOEs) to establish an annuity scheme for their employees.
China Everbright Bank, Bank of China, and PICC Property & Casualty Company Ltd got the go-ahead for their proposed annuity plans, the Ministry of Labor and Social Security announced on February 14.
Before this, SOEs generally only offered statutory pension plans.
In August, the three enterprises were licensed to be annuity management trustees for other companies, but now that they can offer their own, it is possible they will be able to attract more customers, according to a Ministry of Labor and Social Security official surnamed Guo.
The government issued 37 licenses to 29 companies allowing them to oversee other enterprises' annuities last August in order to straighten out the pensions market.
Chinese enterprises have accumulated more than 100 billion yuan (US$12 billion) in annuities in nine months since the government standardized annuity regulations in May 2004, according to Rui Lixin, an official with the ministry's legal affairs department.
Enterprises are offered a tax waiver for money collected as annuities if the amount is not more than 4 percent of their employees' yearly salaries.
The regulations require enterprises to form special offices or hire financial companies to manage the funds.
In another development, Taiping Life Insurance Co. Ltd, and Ping An Insurance Co. Ltd, were approved by the China Insurance Regulatory Commission in early 2005 to develop an annuities business, the first two insurance companies in China to do so.
(China Daily February 16, 2006)