China’s Personal Pension Funds “Enter New Historic Era” Following Release of New Rules

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The Chinese central government has just issued a slew of new regulations on personal pension funds, amidst efforts to unleash more medium and long-term investment funds.

On 4 November several top government agencies including the Ministry of Finance, the banking regulator, the securities regulator and the tax department jointly issued the “Personal Pension Fund Implementation Measures” (个人养老金实施办法).

On the same date, the China Securities Regulatory Commission (CSRC) issued new regulations on publicly offered personal pension funds, while the China Banking and Insurance Regulatory Commission (CBIRC) did similar for the personal pension fund operations of commercial banks and their wealth management subsidiaries.

The tax administration and the Ministry of Finance (MOF) also issued the “Announcement Concerning Personal Income Tax Policy in Relation to Personal Pension Funds” (关于个人养老金有关个人所得税政策的公告), declaring that preferential policies for personal pension funds would come into effect starting on 1 January 2022.

According to state-owned media the release of the slew of new regulations marks the “accelerated deployment [of a personal pension fund system] following the completion of top-level design”, and will advance efforts by China to drive the investment of medium and long-term funds into the real economy.

The “Personal Pension Fund Publicly Raised Securities Investment Operating Management Provisional Regulations” (个人养老金投资公开募集证券投资基金业务管理暂行规定) released by CSRC expands the threshold for products, while also seeking to “encourage long-term investment by investors.”

The Provisional Regulations stipulate that personal pension funds may invest in fund products that include pension funds whose scale is no less than 50 million yuan over the past four quarters, or is no less than 200 million yuan as of the end of the last quarter.

CSRC is also expected to permit personal pension funds to invest in suitable long-term equity funds, mixed funds, bond funds and funds-of-funds following further development of the personal pension fund system, so that “more qualified publicly offered products can become new choices for investors who engage in pension investment.”

State-owned media said that the release of the new regulations by the Chinese central government “marks the entry into an entirely new historic period for China’s personal pension funds.”