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Interim Provisions on the Management of Investing in Publicly Offered Funds with Private Pensions

In April, Opinions of the General Office of the State Council on Promoting the Development of Third-Pillar Private Pensions (thereafter referred to as the Opinions) was released for the building of a multi-level and multi-pillar pension system. On June 24, China Securities Regulatory Commission issued the Interim Provisions on the Management of Investing in Publicly Offered Funds with Private Pensions (thereafter referred to as the Interim Provisions), an important supporting policy for the implementation of the former by making clear the institutional arrangement. What role can the Interim Provisions play in promoting the development of a multi-level and multi-pillar pension system? What opportunities and challenges does the promulgation of the Interim Provisions bring to public funds? What needs to be improved and refined in the Interim Provisions? What supporting systems need to be further clarified?

To explore the answers to these questions, the China Finance 40 Forum (CF40) and Shanghai Finance Institute (SFI) jointly held a seminar to discuss the Interim Provisions and how to improve the policies and implementation. The seminar first heard voices from representatives from four institutions. They were Jing Lei, President of Harvest Fund, Xu Yicheng, Head of Asset Management at China International Capital Corporation, Sun Na, General Manager of Personal Banking Department of China Construction Bank, and Yang Jun, Vice President of Tencent Financial Technology. Following their presentations were comments from Liu Yue, Deputy Director-General of Department of Fund and Intermediary Supervision at China Securities Regulatory Commission and Chen Chunyan, Secretary-General of Asset Management Association of China. The second half of the seminar featured a roundtable discussion joined by all participants.

Experts at the seminar believed that improving people’s willingness to contribute is the key to developing the private pension market, while policy support is needed to make private pensions more attractive. Institutional design should focus on addressing the following issues: the structure of the three-pillar pension system, tax incentives, the annual cap of contribution to personal pension accounts and the flexibility of these accounts.

Under this background, experts proposed policy recommendations as follows. First, it is essential to choose a development model for personal pension accounts and further improve top-level institutional design. Second, it is important to increase the flexibility esp. liquidity of personal pension accounts. Third, the Opinion needs supporting policies and bylaws. For example, it is necessary to set up a channel among the first, second and third pillar accounts, and resolve practical issues such as investment management, payment, recording, fund transfer and account continuity. Bylaws are also needed in areas such as adjustment of the annual cap of contribution to pension accounts and related tax incentives.

The seminar was moderated by Wang Haiming, CF40 Secretary-General.