May 1 start for China supplementary pensions

Enterprise annuity legislation is expected to be effective on May 1, opening a new market for pensions providers.

China's Ministry of Labour and Social Security MoLSS has reportedly said new legislation creating a long-anticipated form of supplemental pension plan, the enterprise annuity, will be effective on May 1, 2004, according to Hewitt Associates in Hong Kong.

Companies in good financial standing that can meet their compulsory contributions to the national social security system will be allowed to offer workers an enterprise annuity and receive a 4% tax deduction.

The enterprise annuity is not an insurance product rather it is a type of defined contribution plan, a sort of Chinese 401k. Stuart Leckie, principal at pensions consultancy Stirling Finance in Hong Kong, says enterprise annuities look similar...

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