Supplementary pension plans, also known as enterprise annuities, are now well accepted in China. However, many companies have still not yet taken up the opportunity to offer these plans to their employees.
The Chinese enterprise annuity was first introduced in the early 1990s as supplementary pension for elders. In December 2000, the Chinese State Council set up a tax incentive policy for enterprise annuities and stipulated that they should be managed on a commercial basis. In 2004, several new regulations were issued covering operational requirements and setting standards for fund management.

The result of the new regulations was that in the quarter ended by September 2007, the total amount paid out under enterprise annuities came to CNY 5.08 billion, an increase of 447% over the previous quarter. This strong growth can be attributed to several factors: a good legal framework, active promotion by the government, high investment incomes, and confidence in the markets.

Today a total of 41 institutions are qualified to offer enterprise annuities services, and there is growing competition in the market, with banks now joining insurance companies and trust companies to manage these plans.

However, despite these positive developments, there is still a long way to go before enterprise annuities meet the full potential need of the market and are spread throughout the country and in every industry.

Many company managements and employees have no idea what an enterprise annuity is, since there is still too little information available about these plans. In addition, the current 4% tax incentive policy remains a sufficient incentive to encourage broader take up. Unbalanced regional development means that enterprise annuity plans are mainly confined to developed areas such as Beijing, Shanghai, Guangdong and major cities along the coast. And while large-scale, profitable industries such as tobacco, electricity, communications, railways, etc. offer enterprise annuity plans, many medium and smaller enterprises do not.

Ping An and enterprise annuities

In order to ensure the best possible provision of enterprise annuity plans to its clients, Swiss Life Network Partner Ping An Insurance (Group) Company of China established a dedicated pension subsidiary, Ping An Annuity Insurance Co., Ltd., in 2004. Chairman of the new company Du Yongmao explains its business approach: “We are not a short-distance runner in the annuity investment markets, and we will not pursue high risk, high-reward investments. We are long-distance runners, striving for long-term, stable investment returns for our clients.”

The company’s powerful finance, IT systems and service platforms allow Ping An Annuity to provide a solid range of qualified services covering trustee management, account administration and investment for enterprise annuities. Its excellent operational systems ensure efficient service to clients, reduced operational costs, and strengthened risk-control capabilities.

Enterprise annuity deliver a range of important business benefits to growing companies. Please contact Ping An to find out more.

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