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HSBC, AllianzGI, Manulife, Prudential eye China’s US$1.5 trillion private pensions as Beijing cuts industry shackles in world’s fastest-ageing economy

  • China’s private pension market is estimated to be worth around 10 trillion yuan (US$1.5 trillion) by 2030, according to McKinsey & Co
  • The CBIRC publishes rules that would allow large insurers to take part in the scheme, as long as they meet certain criteria

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China’s reform of its pension scheme is vital given its rapidly ageing population and declining birth rate, which are putting pressure on the existing system. Photo: AFP
Enoch Yiu

HSBC, Allianz Global Investors and Manulife Investment Management are among some of the biggest international players keen to capture China’s private pension business after regulators announced rules for reforming the US$1.5 trillion market.

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China broadened its private pension scheme, allowing large insurance companies to offer individual retirement products to meet the needs of a rapidly ageing population, according to an announcement by the China Banking and Insurance Regulatory Commission (CBIRC).

The liberalisation of the market puts insurers in the position to join banks and wealth management firms in the private pension market, valued at around 10 trillion yuan (US$1.5 trillion) by 2030, according to McKinsey & Co.
Insurance companies that want to offer private pension products must have at least 5 billion yuan in shareholders’ equity, with a solvency margin ratio not less than 150 per cent and core solvency ratio not less than 75 per cent, the CBIRC said in its statement issued late on Tuesday.

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China tackles challenges posed by its ageing population

China tackles challenges posed by its ageing population

The CBIRC wants to ensure that only large insurers with strong financial capability and experience can participate in China’s private pension market. Any applicant must be well managed, with good governance records free of any disciplinary action for the past three years.

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