China’s private pension scheme to draw US$17.8 billion a year from savings accounts into asset management
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.
Under the scheme, unveiled in April, workers will be able to deposit up to 12,000 yuan per year into personal accounts that can invest in a range of financial products, including wealth-management products, deposits and mutual funds.
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.
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