·2016 will see major change to China’s pension system
·Growth will be driven by the introduction of real tax incentives
·Pension flows will result in fund AUM hitting USD10tr
Update: China’s investment management industry has exceeded USD3.2tr in assets of which less than 6% comes from pension assets. Based on our conservative estimates, upcoming pension reforms could see domestic fund AUM grow to USD10tr. The pace of these reforms has increased with last week’s announcement that China Construction Bank (CCB) Pension has received the first Enterprise Annuity (EA) – China’s equivalent of a 401k – license in a decade. This not only looks set to increase access to the growing industry, but the bank’s relationship with a major US pension manager opens the likelihood of direct foreign access to these assets. There is simply no other opportunity in global asset management that can compare to the ripple effects set to be caused by changes made to China’s pension industry.
Before providing our detailed analysis on what this might mean for pension reform in China, allow us to first touch upon the key development ……
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