By Hu Yuanyuan (China Daily)
Updated: 2007-09-06 09:33

Taikang Life Insurance, China's fifth-largest life insurer, opened its pension business yesterday to explore the country's huge commercial pension and corporate annuity market.

Taikang Pension &Insurance Co Ltd is the country's fifth pension company, following in the footsteps of Ping An, Taiping, China Life and Changjiang.

Taikang Pension was set up by Taikang Life Insurance and Taikang Asset Management Co with registered capital of 200 million yuan (US$26.5 million). Taikang Life holds a 90 percent stake.

"We will first focus our business in Beijing and join forces with other financial institutions," said Ma Yun, president of Taikang Pension.

Taikang set up a research division on the corporate annuity sector in 2000. It was granted a license to manage corporate annuity accounts in 2005.

China's aging population is making its pension business increasingly enticing for both local and joint venture life insurers.

The country's fourth-largest life insurer New China Life also plans to set up a pension business.

Marc van Weede, president of AEGON-CNOOC Life Insurance Co, said earlier the insurer had a strong interest in China's pension market.

"Joint venture life insurers are not restricted from running a pension business (in China), but we hope to receive a more favorable taxation policy in this sector," said van Weede.

Aviva, the world's fifth-largest insurance group, also plans to set up a pension company by the end of this year, as part of its efforts to strengthen its business in China.

"We've filed an application to establish an independent pension business to the China Insurance Regulatory Commission," said Charles Anderson, managing director of Aviva Asia.

Statistics show that over 100 million Chinese have joined the pension system, and experts say the size of the country's pension market could exceed several hundred billion yuan in the near future.

But Anderson said insurers face challenges in the emerging market. "More customer education is needed in China's pension market," he said.