Five cities across China have seen the launch of trials for special pension savings products, amidst efforts to spur the development of the Chinese pension sector.
Starting from 20 November, big state-owned banks including Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC) launched trials for special pension savings products across five Chinese cities.
The five Chinese cities include the Anhui province capital of Hefei, the Guangdong province capital of Guangzhou, the Sichuan province capital of Chengdu, the Shaanxi province capital of Xi’an and the Shandong province city of Qingdao.
The trials are slated to run for a one year period, with individual banks allocated a quota of up to and including 10 billion yuan.
ICBC has already commenced the sale of products, with ABC, BOC and CCB to commence operations shortly.
ICBC said that the special savings products it offered under the trials would include three types – full deposit and full withdrawal, zero deposit and full withdrawal and full deposit and zero withdrawal. The products under the trial will cover four maturities, including five year, 10 year, 15 year and 20 year.
According to Securities Daily, the interest rates for these products are slightly higher than the advertised interest rate for five year fixed-term deposits at the big state-owned banks.
“At present we offer a total of 12 pension savings products,” said a source from an ICBC branch in Chengdu. “Different products have different requirements for different age demographics, and different corresponding interest rates.
“The maximum interest rate can be as high as 4%.”
“For our special pension savings products, people 35 and above can purchase the 20-year, people above 40 can purchase the 15-year, people above 45 can purchase the 10-year and people above 50 can purchase the five-year,” said another source from the branch of a big state-owned bank in Hefei.
“For the five-year product, at present the rate is 3.5%, which is higher than the rate for the 3-year jumbo certificate of deposit and and the 5-year government bond rate.”
Ming Ming (明明), chief economist with China CITIC Securities, said that the trials would help to iron out kinks in pension finance reforms.
“The advance trials will help to uncover problems, promptly make improvements, expand the trial scope based on circumstances, and eventually lead to comprehensive implementation,” Ming said.
“This will aid the stable development of pension fund savings and support the development of China’s pension welfare system.
“During the process of the trials, bank will need to continually accumulate experience, improve the design of pension savings products, and continue to add different types of pension savings products for different maturities, in order to satisfy the diversified pension needs of the masses.”