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Collective Pension Funds: International Evidence and Implications for China's Enterprise Annuities Reform

Author

Listed:
  • Yu-Wei Hu

    (OECD)

  • Colin Pugh
  • Fiona Stewart

    (OECD)

  • Juan Yermo

    (OECD)

Abstract

Collective pension funds (CPFs) - occupational pension funds that cover the employees of more than one employer (enterprise) - have been operating in OECD countries for decades. Generally speaking, there are two models, i.e. closed pension funds, with membership restricted to a particular industry or group of industries, and open pension funds open to all types of company. The governance structure of such funds also operates in two ways – via an internal model (with trustees appointed by employers and employees) and external model (with professional, commercial trustees). In this report, we first describe and analyse how CPFs are operated in selected OECD countries and non-OECD economies. Then, we review occupational pensions (or Enterprise Annuities -EA- in Chinese terminology) in general and CPFs in particular. Given the problems holding back the development of EA plans among small and medium size enterprises (SMEs) in China, and bearing in mind both China‘s specific situations and international best practices, we propose a number of policy recommendations to promote the development of CPFs covering the SME sector. Our practical policy recommendations include 1) industry funds with more open membership; 2) establishment of new purpose-built industry funds; 3) establishment of new regional EA administration centres acting as independent pension councils (trustees) for open pension funds; 4) in parallel to these policy initiatives in China, commercial trustees should be encouraged to establish CPFs targeting the SME sector. Fonds de pension collectifs : Observations internationales et conséquences pour la réforme des rentes d'entreprise en Chine Les fonds de pension collectifs (FPC) – fonds de pension professionnels qui couvrent des salariés relevant de plusieurs employeurs (entreprises) – existent dans les pays de l‘OCDE depuis plusieurs décennies. De manière générale, il existe deux modèles : des fonds de pension fermés auxquels seuls peuvent adhérer les travailleurs d‘une certaine industrie ou d‘un groupe d‘industries, et des fonds de pension ouverts auxquels peuvent adhérer les travailleurs de toutes entreprises. De même, il y a deux modèles de structure de gouvernance : un modèle interne (où les fiduciaires sont désignés par les employeurs et les travailleurs) et un modèle externe (où les fiduciaires sont des professionnels qui agissent à titre commercial). Dans ce rapport, nous commençons par décrire et analyser la façon dont les FPC sont gérés, dans certains pays de l‘OCDE et dans certaines économies extérieures à la zone de l‘OCDE. Puis nous examinons la question des pensions professionnelles (en Chine, on parle de rentes d‘entreprise), de façon générale, et des FPC en particulier. Étant donné les problèmes qui freinent le développement des systèmes de rentes d‘entreprise dans les petites et moyennes entreprises (PME) en Chine, et compte tenu, par ailleurs, des spécificités de la situation chinoise et des pratiques optimales définies au niveau international, nous formulons un certain nombre de recommandations pour promouvoir le développement des FPC dans le secteur des PME. Nos recommandations, concrètement, sont les suivantes: 1) ouvrir plus largement l‘adhésion aux fonds par industrie; 2) créer de nouveaux fonds par industrie spécialisés; 3) mettre en place de nouveaux centres régionaux de gestion des rentes d‘entreprise qui joueraient le rôle de conseils indépendants (fiduciaires) pour les fonds de pension ouverts; 4) parallèlement à ces initiatives d‘ordre public, en Chine, des fiduciaires agissant à titre commercial devraient être encouragées à créer des FPC ciblés sur le secteur des PME.

Suggested Citation

  • Yu-Wei Hu & Colin Pugh & Fiona Stewart & Juan Yermo, 2007. "Collective Pension Funds: International Evidence and Implications for China's Enterprise Annuities Reform," OECD Working Papers on Insurance and Private Pensions 9, OECD Publishing.
  • Handle: RePEc:oec:dafaab:9-en
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    File URL: http://dx.doi.org/10.1787/123505600000
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    Keywords

    China; Chine; collective pension fund; enterprise annuity; fonds de pension; fonds de pension collectif; fonds maître; fonds par industrie; industry fund; master trust; pension fund; petites et moyennes entreprises; rente d'entreprise; small and medium-sized enterprises;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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