07 Sep 2018
Prudential and the Development Research Center of the State Council in China sign memorandum of understanding on research cooperation
Strategic research to promote the development of a sustainable pension system for the ageing population.
Prudential Corporation Asia (PCA) and The Development Research Center of the State Council (DRC) in China have signed a Research Cooperation Memorandum of Understanding (MoU) for a two-year partnership that will bring together Prudential’s global expertise in protection and financial planning and DRC’s leading research capabilities on China’s macroeconomic policy and development strategy.
Under the MoU, Prudential and DRC will collaborate on strategic research focusing on the development of a sustainable pension system in China to support its fast-growing ageing population. The initial study will focus on China’s pilot programme for tax-deferred commercial pension insurance.
At the end of 2017, China had 158.31 million people aged over 65, equivalent to 11.4 per cent of the total population. Official estimates predict this age group will double to approximately 330 million by 20501. The country’s current pension funding gap of around RMB 600 billion is expected to increase by 50 per cent to more than RMB 890 billion in 20202.
Prior to the signing of the MoU, DRC Minister Li Wei exchanged views with PCA Chief Executive Nic Nicandrou on the country’s ageing demographics, pension finance, liberalisation of the financial industry and areas for research cooperation.
At the ceremony, DRC Vice Minister Wang Yiming said: “In recent years, there has been an increasing need for pension services to cope with the rising ageing population in China. Against this backdrop, DRC and Prudential are jointly undertaking 'Research on Pension Finance in China', a strategic partnership that leverages the strong research capabilities of DRC with Prudential’s extensive insurance knowledge. Our aim is to develop policy recommendations to help strengthen China’s pension system and contribute to the development of the financial services sector and the wider economy.”
Nic Nicandrou, Chief Executive of PCA, said: “China is an important market for Prudential and is central to our growth strategy for Asia. We are proud to partner with DRC on insightful research that will help the private and public sectors address the financing needs of the country’s ageing population.”
“As a life insurer and asset manager with global expertise in managing long-term protection and investment needs, Prudential is well placed to support China’s efforts to build a strong safety net for its people and safeguard their financial well-being. We look forward to contributing the insights of our China joint venture from the pilot tax-deferred pension insurance programme, as well as our annuity experience from Prudential's operations in the US and UK, to the DRC research and the subsequent development of policy recommendations.”
Prudential has been contributing to China’s economic development through its successful partnership with the CITIC Group. CITIC-Prudential Life Insurance began operations in 2000 and has a broad footprint across China, covering 78 cities in 18 provinces and providing access to a population of 940 million people3. This year, it was selected to participate in the Chinese government’s pilot initiative for tax-deferred commercial pension insurance in Shanghai, Fujian and Suzhou. Since 2005, CITIC Group and Prudential have also been building up fund management operations with CITIC-Prudential Fund Management. Earlier this year, Eastspring Investments, the Asian asset management arm of Prudential, received approval to establish an Investment Management Wholly Foreign Owned Enterprise in Shanghai.
DRC and Prudential established their close collaboration in 2017 with a research project on “Life Insurance Funds in Support of the Real Economy.” A high-level summary of the research findings was published in March 2018 at the China Development Forum held in Beijing. The 2017 full research publication will be issued in late September.
1Source: National Bureau of Statistics https://www.scmp.com/news/china/economy/article/2129561/china-going-down-same-path-japan-its-ageing-population
2 Source: National Academy of Economic Strategy https://www.bloomberg.com/news/articles/2018-02-05/china-s-next-debt-bomb-is-an-aging-population
3Source: China National Bureau of Statistics, 2015
Prudential Corporation Asia
Tel: +852 2918 5485
Tel: +852 2918 2780