Manulife gears up for growth in China
Insurer sees business opportunities afforded by ageing population and pension reforms
The Greater China chief of Canada's largest insurer, Manulife, is seeking new opportunities on the mainland as the country looks to introduce important reforms in the pension system for a rapidly ageing population.
The most exciting business opportunity is the Shanghai pension pilot that the government has been planning for some time, said Michael Huddart, executive vice-president and general manager for Greater China Manulife (International) in an interview with the Post.
Under the scheme, taxes on pension insurance will be deferred until retirement to encourage more people to buy insurance products. The more they set aside for annuities and pension insurance, the more they will save by way of lower tax payments when they start receiving the pension payouts.
"The authorities have been talking for a while about encouraging voluntary savings into retirement products. That would be the most interesting area for us if they bring in tax incentives to encourage people using insurance for retirement benefits," said Huddart.
Another key reform the firm is watching is a proposal by Beijing last year to end the "dual-track" pension scheme that is seen as unfair. That reform is widely expected this year.
Under the mainland's current pension system, civil servants, including government officials and employees at public institutions, do not have to pay into the country's pension pool but enjoy higher welfare returns after retirement than others. This system is expected to give way to a more equitable pension scheme.
"The demographic is amazing in terms of how quickly people are getting old," Huddart said.
The number of people above 60 in China is projected to rise to 437 million by 2050, accounting for 30 per cent of the population, according to a Xinhua report last year. That compares with 194 million, or 14.3 per cent of the population, in 2012.
According to a Manulife survey, the average cash holdings among investors surveyed in tier-one mainland cities amounted to about 35 months of personal income, the highest in the region.
Manulife was the first foreign insurer to establish a joint-venture life insurance company, Manulife-Sinochem, on the mainland to sell insurance products. Established in 1996, the firm's distribution network covers 50 mainland cities.
To expand the network the insurer is interested in online distribution and collaboration with Tencent's Wechat platform to expand the user base.