Friday, 13 April 2007
China will transfer $9 billion in pensions to selected fund managers
Last Thursday the Chinese Labor Ministry confirm will transfer more than $9.1 billion in company pension plans to selected fund managers by the end of this year. China's market for enterprise annuities, as the plans are known, is expected to grow by 30 billion to 50 billion yuan, or $3.9 billion to $6.5 billion, in 2007.
According with labor authorities China's company pensions market was valued at about 90 billion yuan at the end of last year, of which 20 billion yuan has already been transferred to fund managers. All company pension plans rolled out in the future will be handled by fund professionals.
China allows 37 firms to handle these funds. Of these, four are joint-venture fund houses, according to a KPMG-Reuters research report. These include Harvest Fund Management, 19.5 percent owned by Deutsche Bank, and China Merchants Fund Management, in which ING holds 30 percent. The government will also gradually expand the scope for insurers to invest directly in stocks, confirm the responsible of the insurance regulator, China Insurance Regulatory Commission.
China is allowing pension funds and insurers greater access to stocks to help boost returns as it dismantles the nation's cradle-to-grave welfare system. The benchmark CSI 300 Index gained 121 percent last year.
Preparations are under way to lift a ceiling that limits insurers' direct investment in the stock market to 5 percent of assets, and progress will be made according to the needs of insurance firms. China also bans investments by insurance firms in stocks that have more than doubled in the previous 12 months. There are no current plans to remove this restriction.
Written: by LuisB