CHINA - A bid to facilitate foreign firms running Chinese pension money went ahead successfully last month, according to the Organisation for Economic Co-operation and Development (OECD).
The Workshop on Occupational Pensions in China was held in Beijing on 25-26 October. It was jointly organised by the Ministry of Labour and Social Security (MOLSS) from the People’s Republic of China and the OECD, with co-sponsorship from the governments of Japan and the United States.
The Workshop was the first international meeting of this scale on the topic of occupational pensions in China. It was attended by more than 180 international participants, the majority of whom were government and industry representatives.
The workshop was timely for China as it will fully enter the World Trade Organisation in the coming months and a series of liberalisation and market opening measures will be taken, which will inevitably facilitate labour mobilisation, speed up urbanisation and also encourage foreign participation in the markets, including pension provision.
Aspects that were highlighted by pensions experts during the workshop included:
*The need to provide tax-related incentives to sponsoring employers in order to encourage the spread of occupational pension plans.
*The importance of separating pension plan assets from those of the sponsoring employer. This is particularly the case in China in light of its recently enacted Trust law, which should be modified before it is applied more widely to occupational pensions.
*The variety of supervisory systems in operation around the world. Collaboration and coordination among related supervisory authorities was seen to be of central importance, based on clearly defined divisions of responsibility, which should thereby avoid such extremes as over-regulation or a vacuum of regulation.
*The essential role played by proper supervision by competent authorities, in order to fulfil contractual obligations towards members and beneficiaries, to maintain the financial soundness of the pension sector and to protect consumers adequately. This also contributes to the overall financial stability of capital markets and contributes towards improved corporate governance.
*The importance of effective, reliable and timely disclosure for the success of pension plans that rely heavily on the trust and confidence of pension participants. Moreover, in order for disclosure to work as intended, consumers should be adequately educated on pension issues. This is particularly the case when new types of pension plans are introduced to the public, especially with regard to defined contribution schemes where risk falls on plan members.
By Luke Clancy
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