China proposes rules to regulate private pension investments through mutual funds

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A Chinese national flag flies near the China Securities Regulatory Commission (CSRC) building at the Financial Street district in Beijing, China July 16, 2020. REUTERS/Tingshu Wang/Files

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SHANGHAI, June 25 (Reuters) – China’s securities regulator has proposed rules to regulate private pension investments through mutual funds, setting criteria for qualified products and sales agents under a program that will channel fresh savings into the country’s capital markets.

The draft rules, published late Friday by the China Securities Regulatory Commission (CSRC), came after Beijing launched a landmark private pension scheme in April to meet the challenges of an aging population. Read more

Under the scheme, eligible Chinese citizens can purchase mutual funds, savings deposits and insurance products through their own individual retirement accounts, potentially boosting a pension market that has attracted foreign asset managers, including Fidelity International and BlackRock.

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The proposed rules “set the bar relatively high for products and institutions, and are designed to ensure the safety of pension fund investments and protect the interests of investors,” the CSRC said in a statement posted on its website. .

Initially, target pension funds with at least 50 million yuan ($7.48 million) in assets over the past four quarters are eligible under the pilot pension scheme, the CSRC said.

Other types of retail funds with clear investment strategies and good long-term track records will gradually be added to the eligibility list as the program expands, the CSRC said.

Currently, there are 91 target pension funds that meet the CSRC criteria, according to TF Securities.

In addition, fund managers and sales agents involved in private pension business must establish internal control systems, adopt long-term incentives and ensure the independent operation of pension assets, in accordance with the rules.

Independent consultants estimate that China’s private pension market will reach at least $1.7 trillion by 2025, up from $300 billion currently.

In 20 years, 28% of China’s population will be over 60, up from 10% today, making it one of the fastest aging populations in the world, according to the World Health Organization.

($1 = 6.6878 Chinese yuan renminbi)

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Reporting by Samuel Shen and Brenda Goh Editing by Nick Zieminski

Our standards: The Thomson Reuters Trust Principles.

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