China has issued rules governing its pension funds, paving the
way to allow more select fund managers and financial institutions
to help manage the nation's 90 billion yuan (US$12 billion) of
corporate pensions.
Life insurers and pension firms approved by China's insurance
regulator may offer pension insurance products nationwide,
according to a statement posted on the watchdog's Website
yesterday. Also pension firms may help manage company pension plans
nationally. The rules take effect on January 1.
The government is opening China's pension market to professional
money managers, hoping to boost returns while the nation dismantles
its cradle-to-grave welfare system. China will soon issue 20
licenses to select fund managers and financial institutions to help
manage company pensions, a Labor Ministry official said in
September.
Insurance companies must disclose the investment risk of their
pension products in writing to potential clients, according to the
new rules. Pension funds are subject to investment allocation rules
set by the China Insurance Regulatory Commission, Bloomberg
News said.
Firms must also conduct thorough checks on the financial
backgrounds of clients who are purchasing policies of "significant
size," the statement said without elaborating.
Insurers are eligible to enjoy tax breaks offered by the central
and local governments for their pensions business, the rules
said.
China will transfer more than 70 billion yuan in company pension
plans to fund professionals by the end of this year, Liu Yongfu,
China's vice labor minister, said in April. All corporate pension
plans rolled out in the future will be handled by fund managers,
Liu said.
(Shanghai Daily November 13, 2007)
