bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

Christine Chan

The push by foreign companies to participate in the mainland's burgeoning pension fund industry is gathering momentum as they believe that Beijing would finally open up the sector in a controlled manner.

 About a dozen international insurance and fund management groups are queueing up to offer their experience and expertise as the mainland reforms its antiquated cradle-to-grave welfare scheme to an internationally-accepted multi-pillar system, according to Hong Kong-based fund managers.

 Beijing indicates it welcomes internationally reputable companies to help develop its pension industry, but the fund managers believe it will be some time before such a sensitive market is opened up to foreigners.

 The timetable has been further held back by Asia's financial crisis.

 Woodrow Milliman China chairman Stuart Leckie - a veteran fund manager and a board member of the Exchange Fund Investment - said the world's biggest insurer, AXA of France, Invesco and Schroders had their eyes firmly set on the mainland's pension market.

 Others seeking a piece of the action include Morgan Stanley Dean Witter, Templeton, Nicholas-Applegate, Van Eck, Barclays, State Street Corp and Jardine Fleming, the fund managers said.

 Mr Leckie said foreign firms were encouraged by the mainland's increasing potential.

  By 2030, the World Bank estimates the mainland's pension assets could reach US$1.8 trillion, putting it in the ranks of the world's top five biggest by then. Fund managers said Beijing was not in a rush to introduce foreign firms given its immature capital market.

  Pension funds are now denied access to stock markets, as Beijing is wary that the potential volatile capital flows could affect market and currency stability.

 Investment options now available to pension payments are restricted to treasury bonds and bank deposits.

 'There are not much foreign firms can do with pension payment on the mainland. You don't need to do asset allocation nor cash management given the restrictions,' one fund manager said.

 Mr Leckie said there were also a large number of fund mangers and investment managers looking for potential joint ventures as a means of entering the market.

 Templeton Franklin Investment Services (Asia) marketing and sales director Stewart Aldcroft said it was possible that Sino-foreign joint-venture mutual funds that invested in mainlanders-only A shares be allowed to start up in the first quarter of next year.

 'Beijing said the joint-venture fund will happen - 'maybe' next year, but not a 'yes',' he said.

  The joint-venture fund forms part of Beijing's plan to introduce foreign expertise to help nurture its institutional base in a controlled way, following the launch of five Beijing-approved mutual funds by domestic firms this year to signal the primitive beginnings of a mainland mutual fund industry.

   A pre-requisite for the launch of Sino-foreign mutual funds, some fund managers believe, will be when homegrown fund managers such as Shanghai Pudong Development Bank - which manages pensions for the municipality - has gained considerable experience.

 The new unified pension model began in April, Mr Leckie said.

 The principles of the new system comprise basic (public) pension of 20 per cent of average local wages; individual contribution of 11 per cent (shared between employers and employees); and a voluntary supplementary contribution.



Foreign firms eye foot in door of lucrative pension sector