Embracing China’s Three-Pillar Pension System

Changjiang Pension Insurance Co (Changjiang) is the winner of Asia Asset Management’s 2021 Best of the Best awards for Best Enterprise Annuity Scheme, Best Occupational Annuity Manager and Fintech Innovation in Pensions, China.

Geoff Su, Chairman of Changjiang’s Board of Directors, talks to AAM about how the company has been sticking to fiduciary duty and harnessing fintech to embrace the new era of China’s pension reform in recent years.

AAM: What has been the momentum of Changjiang’s sustainable development in recent years?

Geoff Su: Changjiang sticks to fiduciary duty in pension management since day one. In recent years, with the strategy guidance of our parent company, China Pacific Insurance Group Co (CPIC), Changjiang has seized the opportunity of building up a multi-tier pension system in China and has achieved high-quality development as follows:

1. Achieving record highs in AUM: By the end of 2020, Changjiang’s AUM, operating revenue and net profit reached record highs. The company now is one of China’s Top 3 pension managers in respect of AUM. Especially in the occupational annuity market, among the 33 occupational annuity projects in China, 32 projects have selected their pension managers and 31 have started fund operation. The company has achieved 100% selection of trustees and investment managers in the above 32 projects. And in 2020, we paid great efforts in occupational pension management and achieved satisfactory investment returns to our clients and the beneficiaries.
2. Supporting China’s strategic policies of regional integration and real economy development: Changjiang has hosted the Yangtze River Delta Pension Forum for three consecutive years and prepared a Three-Year Action Plan on Guangdong-Hong Kong-Macao Greater Bay Area. The company has also actively been supporting real economy via alternative investment products, registered as 240 billion RMB (US$36.87 billion), of which 150 billion RMB has been raised and invested in real economy.
3. Deepening incorporation into CPIC: Following “CPIC Service” brand strategy and key account ecosystem, we have carried out a series of work plans in cross-developing products, R&D, IT system construction, incentive mechanism, etc., which enhances One CPIC brand and keeps its cutting edge in the market.
4. Forging core capabilities in pension management: We have built professional investment research and marketing team with continuously exploring in long-term incentives and adopting talents via Management Trainee Programme, etc., which empowers Changjiang a high quality future.
5. Winning great honours in social responsibility: We have supported the work resumption of post-epidemic and poverty alleviation, issued debt investment plans in shantytown renovation, resettlement housing, etc. and carried out public welfare donations. At the end of 2020, Changjiang was awarded the honour of “National Civilised Unit”.

AAM: How is Changjiang strengthening its technology application for its pension services?

Geoff Su: CPIC closely follows the fintech trends through the establishment of fintech subsidiaries, the introduction of leading technology talents, the strategic cooperation with top IT companies and universities, and the exploration of frontier technology application such as artificial intelligence, blockchain, cloud computing, big data, etc..

As a key member of CPIC to focus on pension management, Changjiang has launched a series of measures for the digital transformation in 2020:

1. We are upgrading the one-stop customer service platforms, which will apply technologies such as artificial intelligence and big data for customer profiling.
2. The shareable and expandable mid-office platform is designed to respond to customer requests more quickly and meet various risk appetites.
3. A highly efficient and low risk operation platform has been built for our increasing AUM, which will enhance the settlement, dividend distribution, auditing and registration processes.

AAM: What are the latest developments in mainland China's three-pillar pension system?

Geoff Su: China’s “14th Five-Year Plan” mentions that the government shall implement a national strategy coping with an ageing population and develop a multi-tier and multi-pillar pension system. The standardised development of the 3rd pillar, which is likely to be the largest growth engine in future pension market, has been focused by regulatory authorities and expected by all walks of life.

Thus far, the 3rd pillar is taking shape of individually-funded accounts, tax-exempt policy and market-oriented investment fund operation. Various financial institutions are striving to standardise pension products and vigorously develop professional pension products in accordance with retirement needs. It is expected that a series of policies will be issued in the future, and the private pension market will also usher in broad prospects.