China picks corporate pensions managers | FT
Three European groups ING, Fortis and Deutsche Bank and Canada's Bank of Montreal were on Tuesday handed the chance to be the first foreign companies to manage China's new corporate pension schemes.......
The new voluntary company pension scheme is similar to the US-style 401 K system, in which pension contributions are held in a legally distinct pension fund governed by trust law. Stuart Leckie, a Hong Kong-based pensions expert and adviser to the Chinese government, said: "Over the next 10-15 years, China's company pension system will become a serious business."......
With its rapidly ageing population and falling fertility rate, China is facing a pensions crisis. It has a narrow "demographic window of opportunity" of about 10 years to fix its fledgling pension system, according to a recent study by Mr Leckie. Over the next 40 years, China's dependency ratio the number of people of working age for every pensioner is expected to drop from 9:1 to 2.6:1, according to United Nations projections.
China's partially funded pension system, launched in 1997, includes two mandatory elements a pay-as-you-go state pension administered by the provinces and individual pension accounts. It also has a voluntary company pension scheme and a national social security fund of last resort.
While company pension schemes are allowed to invest in bonds and equities, industry experts believe it will take time to build up a significant exposure to the country's stock markets, which have been hit by extremely negative investorsentiment. China has yet to establish a nationwide pension tax rule.
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