With Pension Shortfalls Looming, China to Test Out Investment Products for Retirement
What’s new: Four Chinese bank subsidiaries will begin testing out retirement wealth management products Wednesday in four cities as China tries to boost private retirement income amid looming shortfalls in its state pension system.
The wealth management arms of Industrial and Commercial Bank of China Ltd., China Construction Bank Corp., China Merchants Bank Co. Ltd., and China Everbright Bank Co. Ltd. will participate in the pilot program, which is set to last for one year, the China Banking and Insurance Regulatory Commission (CBIRC) announced Friday. Each company can sell up to 10 billion yuan ($1.55 billion) of such products under the program.
The CBIRC didn’t define retirement wealth management products, but demanded that the companies create products that meet people’s long-term retirement needs and expand their sources of income.
The background: China has what it calls a “three-pillar pension system,” in which nearly all funds are in the first and second pillars — namely basic pension insurance funds run by the state and annuity funds run by employers.
Policymakers are now looking to build up the underdeveloped “third pillar” — or private pension funds — by offering more policy support. In June, a pilot program was launched allowing individuals to open private accounts in participating insurance companies. Earlier this month, a new state-owned national pension company was approved to help bolster the private pension sector.
Quick Takes are condensed versions of China-related stories for fast news you can use.
Contact reporter Zhang Yukun (firstname.lastname@example.org) and editor Michael Bellart (email@example.com)
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