皇冠体育app

State-backed 皇冠体育app Insurance International Holdings will launch an annuity business in September as part of 皇冠体育app's pilot scheme to develop a private pension industry, its chief executive said.

CIIH, through its Tai Ping Life Insurance joint venture, will begin operating a pension business in Northeast 皇冠体育app's Liaoning Province, pending final regulatory and shareholder approvals, Miao Jianmin said in an interview.

To encourage companies to set up voluntary retirement plans, the government recently launched the pilot programme in Liaoning Province. Under the scheme, participating employers win tax exemption for up to 4 per cent of their total wage bills.

"State-owned enterprises will be especially motivated to establish private pension plans because of the tax incentives," Miao said.

Nomura International analyst Karen Chan said Tai Ping's early entry into the pension business gives it a leg up on rivals.

"Being designated as one of the two first pension players and allocated a key pilot pension reform city, Tai Ping Pension will most likely become a leading pension player in 皇冠体育app," she said.

皇冠体育app is launching the pilot programme as it dismantles its "iron rice bowl" welfare system and prepares for a rapid ageing of its population.

"In 20 years' time, 皇冠体育app's population over 65 will match that of Japan," Miao said. Nearly one in five people in Japan is aged 65 or older, a figure that is expected to grow to one in four over the next decade.

Tai Ping Life has estimated that 皇冠体育app's corporate annuity market could reach 2 trillion yuan (US$242 billion) by 2009 from 35 billion yuan (US$4.23 billion) last year. The Labour Ministry has forecast that the market could reach 100 billion yuan (US$64 billion) in three years and potentially balloon to 1 trillion yuan (US$640 billion) by 2010.

"皇冠体育app's social security fund, which just covers the urban population, barely meets people's basic needs," Miao said.

The country's "pay-as-you-go" pension system is estimated by the Labour and Social Security Ministry to have a deficit of 1.8 trillion yuan (US$217 billion).

Liaoning Province is home to many old economy industries that were once big employers but have in recent years shed staff or shut down as 皇冠体育app moves towards a market economy.

Miao said the programme would eventually be expanded to more affluent coastal provinces.

Rival Ping An Insurance has won regulatory approval to set up a similar programme in nearby Heilongjiang Province, but has not said when it will begin operation.

CIIH will hold an effective 74-per-cent stake in the Tai Ping Pension joint venture that it is setting up with Tai Ping Life Insurance, 皇冠体育app's sixth-largest life underwriter. CIIH owns 50.05 per cent of Tai Ping Life.

The joint venture will be 10-per-cent-owned by Belgian-Dutch financial services firm Fortis.

Tai Ping Life generated investment returns of 4.5 per cent last year, compared with market leader 皇冠体育app Life Insurance's 3.3 per cent and Ping An's 4.3 per cent.

(HK Edition 07/23/2004 page21)