By Hao Zhou (chinadaily.com.cn)
Updated: 2007-08-29 17:40

China's insurance regulator is working at constituting special regulations on managing the pension insurance business, the Shanghai Securities News reported yesterday, citing an official at the China Insurance Regulatory Commission (CIRC).

It is a move to ensure insurance companies that handle corporate annuities are able to pay expired debts and future liabilities to avoid risks during managing annuities, and to protect the beneficiary's legitimate rights and interests, said Liang Tao, director of CIRC personal insurance regulatory department.

Statistics from the Ministry of Labor and Social Security (MLSS) show that the corporate annuity fund, which covers 9.64 million people, had 91 billion yuan in assets in 2006, but only 15.8 billion yuan, or 17 percent, was managed by professional investors.

A total of 30 financial institutions, including insurers and securities and trust companies, are currently designated as custodians, trustees and asset managers for corporate annuity management.

A new round of campaign for granting qualifications required for the annuity management will be launched next month.

Liang suggested that those pension insurers and life insurance companies which plan a move into pensions try to acquire the trustee, custodian and asset manager licenses from MLSS together, in a bid to improve the profit ratio and reduce costs and risks.

A recent survey shows China's enterprises annuity will add 50 billion yuan (US$6.62 billion) annually in five to 10 years.

CIRC encourages insurance companies to develop more flexible annuity products and annuity account services, such as fixed and alterable annuities, transferable annuities, as well as open annuity accounts, to stress the investment and account management functions, according to Liang.

Meanwhile, CIRC will study and discuss the taxation policies on pensions with relative government organs, in an effort to bulid a multi-level pension system covering everything from enterprise annuity to group and personal pension insurance.

CIRC will help MLSS bring enterprise annuity funds under the management of professional managers by the end of this year according to a previously-set target. The insurance industry needs cooperation with MLSS to take over the enterprise annuities, based on its advantages in accurate calculation, product design, and sales and asset management, said Liang.