Chinese life insurers boost efforts in pension finance

The sector has been named as one of the five key areas for financial sector growth in China.

Chinese life insurers are boosting their efforts in the pension finance sector, leveraging strengths in product design for the elderly, long-term capital management, and partnerships within the elderly care industry. 

The sector has been named as one of the five key areas for financial sector growth in China, driving major players like China Life Insurance to expand their services.

China Life has developed a pension insurance system that includes commercial pension insurance, health insurance, and personal accident coverage for seniors. 

According to Hong Mei, general manager of China Life’s Strategic Planning, the company has accumulated around $562.39b in pension reserves, meeting diverse elderly care needs.

As China increasingly transitions to a moderately ageing society, the demand for robust pension insurance is growing, said Yuan Xin, vice president of the China Population Association.

China’s three-pillar pension framework consists of public old-age insurance programs, enterprise and occupational annuities, and a range of private pension products and plans. 

The private pension system, launched in 36 cities in 2022, has gained traction with over 60 million accounts opened by June 2024. This growth signals the expanding role of commercial and private pension products in China’s financial landscape.

Guomin Pension & Insurance Co., a Beijing-based pension insurer, announced that Allianz Global Investors GmbH will acquire a 2% stake in the firm. This investment shows foreign interest in China’s pension finance sector, aligning with outlooks on China's long-term economic prospects, according to Cao Yong, chief actuary at Guomin Pension & Insurance.

Beyond financial products, Chinese insurers are also entering elderly care services. China Life has invested in a $7b health fund and a $2.8b pension fund to support the "finance + elderly care" model. These investments include the establishment of 17 retirement communities across 14 cities, enhancing service options for seniors.

Technological innovation also leads the sector’s growth, with Guomin Pension & Insurance launching the "ZHAO QIAN SUN LI" digital platform which provides personalised retirement planning services, including financial assessments and eldercare product recommendations. By September, this platform had served over 100,000 individuals.

As China continues to prioritise high-quality development in its insurance industry, insurers like Guomin underscore the importance of sustainable growth and regulatory compliance to ensure long-term quality and sector stability.