Regulator issues new rule on pension business
Updated: 2007-11-14 07:07
The insurance regulator yesterday launched a management rule on pension business, aiming to standardize the country's pension market and protect the interests of policyholders.
The rule, the first of its kind in the industry, will take effect on January 1.
According to Article 23 and 40, once policyholders begin to withdraw pension, insurance companies cannot recommend high-risk investment portfolio to them within five years. If policyholders insist on choosing products of higher risks, the insurer should inform them of the risks in a written form.
Meanwhile, interest ascription, a concept used to divide the interests between staff and enterprises in annuity, has also been introduced in the rule for the first time to better protect policyholders' interests.
It should be clearly stated in the contract, said the rule. For instance, if the employee has one year of experience in the enterprise, 10 percent of enterprise annuity will go to him. If he has five years of experience, then he can get 100 percent of the enterprise annuity.
According to statistics from the insurance regulator, China's commercial pension business has been growing at an average 15 percent each year since 2001, with premiums totaling 62.6 billion yuan ($8.42 billion) last year.
The country's pension fund has exceeded 200 billion yuan and experts say the size of the country's pension market could exceed several hundred billion yuan in the near future.
China's aging population makes the pension business increasingly enticing for both local and joint venture life insurers.
There are five professional pension companies in the country, with 51 life insurers. The latest to be established is Taikang, following in the footsteps of Ping An, Taiping, China Life and Changjiang.
Marc van Weede, president of AEGON-CNOOC Life Insurance Co, had earlier said the insurer had a strong interest in China's pension market.
"Joint venture life insurers are not barred from running pension businesses (in China), but we hope to receive a more favorable taxation policy in this sector," said van Weede.
(China Daily 11/14/2007 page13)
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