Published by Asia Asset Management – 8th December 2016
China’s National Council for Social Security Fund (NSSF) has appointed 21 domestic asset managers to undertake its new pension mandates. The bureau is looking to establish a new pension fund scheme dedicated to provincial or local pension accounts.
Out of the 21 appointed entities, 14 are domestic fund managers. They include: Bosera, China AMC, China Universal, China Southern, E Fund, Fullgoal, Harvest, HFT, Yinhua, China Merchants, DaCheng, Penghua, ICBC-Credit Suisse, and GF Fund. Six out of the 21 are insurance asset and EA (enterprise annuity) managers, comprising of: Taikang Asset Management, PICC Asset Management, China Life Pension, Changjiang Pension Insurance, Ping An Pension and Huatai Asset Management; while CITIC Securities is the only securities house to be awarded the pension mandate.
Established in 2000, the NSSF was initially formed to oversee the country’s supplementary pension Social Security Fund (SSF). Since the fund’s inception, the bureau has managed to deliver an inflation-beating annualised return at 8.82%, taking its total assets to 790.7 billion RMB (US$114.7 billion) as of the end of 2015.
The NSSF had also received 100 billion RMB worth of pension mandates from the Guangdong and Shandong provincial governments in 2012 and 2015, respectively.
Other four provincial governments such as Jiangsu and Shanxi are reported to follow suit, allocating 400 billion RMB in aggregated pension assets to the NSSF.
The launch of the new pension scheme was sped up by the implementation of the government’s “Measures for Administration of Investment in Basic Pension Insurance Funds” in August 2015, which allows local pension funds to invest up to 30% of its total assets in domestic equities, equity funds and mixed funds. In the context of the NSSF, the fund would be able to invest up to 120 billion RMB in pension monies in the A-share market initially.
The bureau named Bank of China, China Merchants Bank, Bank of Communications, and Industrial and Commercial Bank of China as custodian banks of the scheme on November 29.
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