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China Banking Regulatory Commission has allowed China Merchants Bank to provide trustee services for the occupational pension.
It is the first domestic bank to acquire a license as occupational pension trustee, a fast-growing business in China.
Occupational pension is a private pension scheme run by employers, a supplement to the State-run basic pension system and commercial retirement insurance.
Statistics from the Ministry of Labor and Social Security say that the sector stands at around 50 billion yuan or about six billion US dollars presently and is still growing rapidly.
Ba Shusong, deputy director of the Financial Research Institute of the State Council Development Research Center, estimated that the market could expand by 100 billion yuan or 12 billion US dollars a year, if it has appropriate policy guidance and systematic arrangement.
Lured by the market potential, China Merchants Bank launched an occupational pension management center last May. It signed a co-operative agreement with the American International Group in March on the development of the business.
The newly obtained license enables the bank to provide comprehensive services for enterprises running occupational pension, though presently it still cannot make capital market investments.
It is waiting for final permission from the Ministry of Labor and Social Security to conduct the trustee service.
The competition in the occupational pension market is intensifying and attended by various types of financial institutions, not just banks.
(Shenzhen Daily September 27, 2004)
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