International asset managers could benefit from a reformed retirement market in China, according to a recently published study.
The report, 'China Pensions Reform: Winning Strategies for Global Asset Managers amid Evolution in Retirement Market', was produced by KPMG China and the Asia Securities Industry & Financial Markets Association (Asifma).
It forecasts that the Chinese pensions market could grow from US$3 trillion to $3.9 trillion by 2030, driven by an ageing population and rising healthcare expenses which has exposed the need for adequate pension provisions.
“Creating a sustainable pensions framework is a multi-dimensional challenge, which will require stakeholders across public and private sectors to work together,” said Abby Wang, partner, head of China, asset management, KPMG China.
“However, with the urgent need for reform, China is ready to take practical measures, including taking advantage of lessons from other jurisdictions as well as embracing new technology-enabled solutions.”
Consequently, the urgent need for reform will provide some opportunities for global asset managers, states the report. In particular, the recent introduction of private individual pensions has created a new and potentially massive market,” said Eugenie Shen, managing director and head of Asifma Asset Management Group.
China began reforming its pensions market as far back as 1991 and introduced enterprise and occupational annuities between 2004 and 2014.
The most recent reform was the introduction of private individual pensions last year under pillar three of the pension reforms. The pillar three market is forecast to grow from RMB4 trillion to RMB7 trillion by 2030.
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