Chinese insurers pursue innovative programs to shore up elderly care

Pension finance has been elevated to a strategic priority since the Central Financial Work Conference held in 2023 outlined the industry as one of the five most important areas for the high-quality development of the country's financial sector.

In recent years, Chinese financial institutions, especially life insurers, boosted the innovative development of the pension finance sector by leveraging their strength in designing insurance products for the elderly, long-term capital management, and collaboration with the elderly care sector.

"China Life Insurance Co Ltd places great emphasis on the development and layout of pension finance and has played a significant role in the development of the country's three-pillar old-age insurance, contributing to the construction of a pension financial service system encompassing pension insurance, elderly care services, and elderly care ecosystem," Hong Mei, general manager of the Strategic Planning Department of China Life, told the Global Times in an interview on Monday.

The company has built a pension insurance product system comprised of commercial pension insurance, health insurance, and personal accident insurance for the elderly, and accumulated pension reserves of approximately 4 trillion yuan ($562.39 billion) by now, which can comprehensively meet clients' multi-layered elderly care needs such as pension reserves, and health and accident risk guarantee.

As China has already entered a moderately aging society, adequate pension insurance is increasingly important and will serve as an economic stabilizer in life, Yuan Xin, vice president of the China Population Association and a professor at Nankai University, told the Global Times on Tuesday.

China has a three-pillar old-age insurance mechanism, which includes national old-age insurance programs, supplemented by enterprise and occupational annuities, as well as commercial old-age financial products and private pension plans.

In November 2022, China's private pension system was made available to qualified citizens in 36 cities and regions including Beijing, Shanghai, and Guangzhou in South China's Guangdong Province.

By June 2024, more than 60 million people had opened private pension accounts under the government-supported, voluntary, and market-oriented pension system, data from the Ministry of Human Resources and Social Security showed.

The commercial old-age financial products and private pension plans are expected to play a more significant role in the near future, Yuan said.

Entering the digital era, the elderly care industry faces some new changes. Empowered by technological advances, the integrated development of the elderly care industry and the insurance industry is creating new possibilities for the growth of the insurance industry, he said.

The development of pension finance in China will be an important and strategic opportunity, as the Central Financial Work Conference held in October 2023 highlighted the need for ramped-up efforts in five key areas – technology finance, green finance, inclusive finance, pension finance, and digital finance.

The resolution adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party in mid-July also emphasized the importance of refining policies and mechanisms to advance elderly care programs.

Guomin Pension &Insurance Co., Ltd, a Beijing-based pension insurer, announced in June that it plans to introduce German investment firm Allianz Global Investors GmbH as a strategic investor, with a 2-percent stake in the insurance firm.

Allianz's investment in the newly-established professional Chinese insurer underscores those foreign institutions' efforts to continue to hike investment in China's pension finance market while displaying their full confidence in China's long-term economic growth prospects, Cao Yong, chief actuary of Guomin Pension &Insurance Co, told the Global Times in an interview on Tuesday.

The Annual Conference of Financial Street Forum 2024 will be held from Friday to Sunday, under the theme "Trust and Confidence." Attracting domestic and foreign representatives in the financial industry, a parallel forum will be held on Saturday to discuss global challenges and Chinese market opportunities in the process of promoting the development of pension finance, with the goal of achieving high-quality development of pension finance in China.

In recent years, Chinese insurance companies have been actively participating in the development of the elderly care industry, with new "finance + elderly care" models growing up like bamboo shoots after a spring rain, which accelerates the innovative development of pension finance by improving the utilization efficiency of all social resources.

In terms of elderly care services, China Life leverages the feature of patient insurance capital to shore up the elderly care ecosystem. Through the establishment of a 50-billion-yuan health fund, 20-billion-yuan pension fund, and 10-billion-yuan silver economy industry investment fund, the insurer has launched 17 retirement communities in 14 cities, according to Hong.

In September, the State Council unveiled a set of guidelines on the high-quality development of the insurance industry, calling for the promotion of digital and smart development, and the enhancement of the industry's capacity for sustainable development.

In implementing the spirit of the guidelines, Guomin Pension &Insurance Co said the company has been exploring technology-empowered inclusive elderly care planning services for individuals. "We have launched ‘ZHAO QIAN SUN LI' Personal Retirement Planning Service Platform that provides one-stop digital services including evaluating an individual's financial health and recommending elderly care product portfolios," Cao said, noting that they have served more than 100,000 individuals by the end of September.

"Sustained development is the core for the pension finance sector. To be able to provide quality pension finance products and services in the long run, insurance companies should firmly hold the bottom line of compliance, maintain strategic resolve and shore up a good reputation, and integrate their own high-quality development with overall pension finance sector development," Cao said.