Manulife plans to hire local talent to surge its pension business in China as it aims to lay a strong footprint in the untapped private pension provider space.
In the previous week, Paul Lorentz, CEO of Manulife Investment Management (Manulife IM), told Reuters in an interview that, “Having 100% ownership of a local unit with access to China’s newly launched private pension scheme will help Manulife accelerate its plans to tap the retirement business opportunity.”
“There’s a massive retirement funding gap (in China), particularly relative to other developed markets,” said Lorentz.
“I think we have an opportunity to really help the government and the regulator shape the industry,” he added.
Moreover, a declining and rapidly ageing population in China is raising alarm about an emerging pension crisis in the country, with one state-run academic institution warning that the public pension system will run out of money by 2035 if it continues to work as it is now.
In the previous year, China’s 1.4 billion population shrank for the first time in 61 years.Its National Health Commission predicts that the number of individuals aged 60 and more would increase from 280 million to more than 400 million by 2035, which is roughly equivalent to the current population to the entire current population of Britain and the U.S. combined.
The ratio of China’s pension assets against its GDP is 10%, in sharp contrast to 171% for the U.S, according to Lorentz.
Further, to address some of the shortcomings of the public and corporate safety nets, China rolled out a private pension system across 36 cities in November, which permits individuals to open retirement accounts at banks to buy pension products ranging from deposits to mutual funds.
A wind of foreign financial companies have qualified to participate in the plan, and various of them, which include Chinese ventures of JPMorgan and Warburg Pincus, are planning to gear up to surge their retirement offerings in the country’s fund market, priced at around $3.94 trillion.
Despite the fact that China was already in the spotlight for Manulife, with mutual fund assets managed by the joint venture increasing by over 30% in the previous year. However, because of unpredictable markets, its global assets under management fell by 8% in 2022 to $745 billion.
Michael Dommermuth, head of wealth and asset management for the firm in Asia, said, “Ultimately, growing private pension assets is “a primary focus” for the firm in China, and “the growth of that will be enormous.”
- Published By Team Genuine Reporter