China’s private pension scheme to draw US$17.8 billion a year from savings accounts into asset management
- The scheme, unveiled in April, will swell the asset-management market by 120 billion yuan per year, analysts predict
- China Citic Bank has joined the financial institutions seeking to benefit while helping Chinese citizens move their vast savings into investment vehicles
China’s newly expanded private pension scheme will inject at least 120 billion yuan (US$17.8 billion) a year into the country’s asset-management market, according to analysts, as China Citic Bank becomes the first Chinese lender to apply for a licence to offer pension accounts in the scheme’s pilot programme.
The government aims with the scheme to proactively tackle the challenges of an ageing society, while also providing more long-term and stable funding to capital markets. With 238.61 trillion yuan in private savings accounts in China, experts expect the framework to attract banks, insurers and funds into the segment.
The roll-out of the scheme should be especially beneficial for banks, securities firm Guotai Junan said on Tuesday, in a report in which it also predicted that private pension deposits will balloon the asset-management market by 120 billion yuan a year.
“Banks will directly benefit from the account openings and thus gain more clients,” said analysts led by Liu Xinqi in the report. “The direction of traffic will help banks take the opportunity to market and sell pension products within their systems. The clients with medium- to low-risk appetite will tend to choose the products provided by banks.”
China Citic Bank was the first lender to apply for a licence to service clients in the scheme’s pilot programme, the China Securities Journal reported.
