CBIRC Will Amend Trust Law to Drive Growth of Aged Care Trusts

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The China Banking and Insurance Regulatory Commission (CBIRC) plans to drive the growth of aged care trusts via amendments to the existing trust law.

CBIRC said that it will work with other authorities on amendments of the “People’s Republic of China Trust Law” (中华人民共和国信托法) in order to “further improve provisions in relation to trust asset transfers, trust registration and trust taxation, to provide systemic protections for aged care trusts.”

The Chinese banking regulator made the statement in a series of written responses to proposals of the China People’s Political Consultative Conference (CPPCC) issued on 17 November.

As of the end of 2019 China’s population aged over 60 stands at 245 million people, comprising 18.1% of the total population. CBIRC said that “the advantages of the trust system [can] alleviate pressure on aged care protections.”

“[It] is a sustainable and effective measure for strengthening aged care protections, and an important means for driving financial supply-side structural reforms and driving healthy development of the capital markets.”

According to CBIRC support for the establishment of an aged care trust system should make full use of the “risk separation” advantages of trusts as well as the specialist investment capabilities of trust companies.

CBIRC said it will coordinate with other central government authorities to issue preferential tax policies for aged care trusts as soon as possible.

China’s Ministry of Finance (MOF) and the Chinese central bank said however that at present the “time is not ripe” for loosening of current policy restraints for aged care trusts and the provision of state-level insurance mechanisms.

“If state-level insurance mechanisms strengthen rigid payments, this could lead to crowding out effects for other aged care fund management models.”

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