The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
According to Allan Lam, Hong Kong-based Asia global pensions sales director for parent company American International Group, the product is similar to the Orso [Occupational Retirement Schemes Ordinance] plans AIA has been managing in the Special Administrative Region for the past 30 years.
Employers in China can establish the scheme with varying contribution rates, made either as a lump sum or percentage of wages, for different levels of employees. The money is vested in a combination of two underlying funds: a guaranteed fund investing in local fixed-interest assets and an investment-linked product with a maximum equity allocation of 60%. Both are managed by AIGÆs own asset management joint venture company in Shanghai and are renminbi-denominated.
Unlike other insurance policies marketed in China, employees are not allowed to remove assets from the scheme until retirement, or for permanent disability or on leaving their employer.
According to Lam several privately owned small- and medium-sized enterprises, some listed in Hong Kong, have already signed up to the scheme, and multinationals with a presence in China are likely to follow suit.
ôMany multinational companies will be setting up offices in China,ö he says. ôMany of these have been clients of ours for several years, and it is logical for them to stay with us.ö
The popularity of the scheme, Lam argues, will also be driven by the high level of competition among employers to recruit the best staff in China. ôThe employment market is extremely competitive,ö he says. ôAnd as companies fight for staff pension schemes will become an important recruitment factor.ö
Lam stresses that AIA has no plans to enter into the much-vaunted enterprise annuity market in China. It prefers to offer a complete package rather than serve as one participant in an unbundled retirement product. Enterprise annuities, which are ChinaÆs new, voluntary corporate defined-contribution schemes, require separate trustees, administrators, custodians and investment managers, and no one firm has more than two such licenses.
ôWe are not looking at large domestic companies and state-owned enterprises,ö he adds. ôWe will instead focus on small- and medium-sized enterprises with between 50 and 300 employees.ö
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