Abstract
China has rolled out a series of policies to promote pension reforms since 2016, including policies related to market-oriented operation of basic retirement funds, interim measures for the administration of occupational annuity funds, and tightened regulation of old age security management services, introducing the concept of retirement fund for the first time at the policy level. With the intensive introduction of policies and the vigorous advance of the market, these policies have accelerated pension reforms and created both opportunities and challenges for the pension system. In 2016, the total assets of enterprise annuities and the national social security fund exceeded RMB 1 trillion and RMB 2 trillion, respectively. However, as the rate of return in capital markets continued to decrease, the return on the assets of enterprise annuities and the national social security fund hit the lowest in the last five years. The assets of basic pensions managed by custodians designated by the government were lower than expected. Looking to the future, the pension finance will mainly focus on the expansion of the national social security fund, the investment and management of occupational annuities and the development of pillar 3 personal pensions. The size of the pension market will further increase and demonstrates the following structural characteristics: enterprise annuities will grow slowly; the assets of basic pensions managed by custodians will be less than predicted; the national social security fund and occupational annuities will witness bigger development. In addition, as macro-economic uncertainties increase, the difficulty in managing pension assets will continue to grow, and annuity councils will face the challenge of upgrading. Factors such as investment performance and comprehensive service capabilities will become main driving forces for pension management institutions.
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Notes
- 1.
The first six endowment insurance companies are China Life Pension, Ping An Pension, Changjiang Pension, Taiping Pension, Taikang Pension, and Anbang Annuity.
- 2.
The State Council required that, within two years starting from May 1, 2016, employer contribution rate shall be reduced to 20% in provinces where the previous rate is above 20%; employer contribution rate shall be reduced to 19% in provinces where the previous rate is 20% and the cumulative balance of the basic pension insurance fund for enterprise employees by the end of 2015 is sufficient to pay for more than nine months of such contributions.
- 3.
Data current as of April 30, 2016.
Reference
Dai, X. (2013). Collection of Dai Xianglong on social security fund investment. Beijing: China Financial Publishing House.
Acknowledgements
We are grateful to Mr. Liu Yi, Deputy General Manager of China Asset Management Fund, and Dr. Zheng Jian, Director of Corporate Business Department, for their guidance.
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© 2018 Social Sciences Academic Press and Springer Nature Singapore Pte Ltd.
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Sun, B. (2018). Pension Finance: Growing Total Pension Assets and Low Rates of Return. In: Dong, K., Yao, Y. (eds) Annual Report on Financing Old Age Care in China (2017). Springer, Singapore. https://doi.org/10.1007/978-981-13-0968-7_6
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DOI: https://doi.org/10.1007/978-981-13-0968-7_6
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