Foreign asset manager cashing in on China's pension market

Tracy Li
Global asset manager BlackRock is offering retirement wealth management products to Chinese amid the country's pension reforms.
Tracy Li

Global asset manager BlackRock is offering retirement wealth management products to Chinese people amid the country's pension reforms.

The product, the first of its kind issued by BlackRock CCB Wealth Management, opened for investors starting on Monday until May 9 and is a public mixed asset product with a maturity of 10 years.

It builds a portfolio that includes less risky treasury bonds, policy bank bonds and risk assets.

"Retirement-oriented investment is critical to long-term retirement planning," said Tony Tang, BlackRock's China head. "We are pleased to participate in the development of the country's third-pillar pension products."

China last week expanded the country's private pension scheme, allowing employees to invest and supplement funds in their pension accounts.

Under the plan, participants can deposit up to 12,000 yuan (US$1,826) a year to their personal pension accounts, which can invest in a variety of financial products like bank wealth management, deposits, commercial pension insurance and mutual funds.

And preferential tax policies will be made to encourage participation.

Some cities will be selected for a one-year trial before the policy is gradually rolled out across the country, according to a document from the State Council.

Currently, the third-pillar comprises retirement insurance plans and retirement investment products, or pension target funds.

The milestone move comes as China's first two pillars – a government-run basic pension scheme and corporate supplementary plans – are facing increasing strain.

China's pension market reached 12 trillion yuan at the end of 2020, doubling from 2014, said Ernst & Young in its inaugural China Pension Report earlier this year.

As China's population ages, pension reform is now a top national priority and Chinese policymakers and regulators are seeking to build a more robust pension industry in the 14th Five-Year Plan (2021-2025), said the report.

China unveiled the first batch of pilot program of wealth management products for retirement planning in four domestic cities in September 2021 and expanded its scope in March.

In January, BlackRock CCB Wealth Management became the first joint venture wealth management company which was approved to join in the retirement wealth management pilot program.

So far, 16 retirement wealth management products have been launched under the pilot program, raising 42 billion yuan, industry data shows.

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