According to a report from the Financial Link Agency on December 12 (Reporter Yan Jun), after two years of pilot programs in 36 cities, the personal pension system is being fully promoted nationwide.

On December 12, the Ministry of Human Resources and Social Security, the Ministry of Finance, the State Administration of Taxation, the Financial Supervisory Authority, and the China Securities Regulatory Commission jointly issued a notice on the comprehensive implementation of the personal pension system (hereinafter referred to as the "Notice"), stating that the personal pension system will be promoted nationwide on December 15.

This nationwide promotion has two core aspects: first, expanding from the previous pilot in 36 cities to the entire country, adding circumstances for early withdrawal; second, the continuous expansion of personal pension products. It is reported that the China Securities Regulatory Commission will timely optimize product supply by including the first batch of 85 equity index funds into the personal pension investment product catalog.

Personal pensions are characterized by long-term, sustained, and large-scale nature. By actively investing in capital markets, they help to share the benefits of real economic development and support long-term preservation and appreciation. As representative professional institutional investors in the capital market, the public mutual fund industry has currently been entrusted to manage various pension assets exceeding 6 trillion yuan, accumulating rich management experience.

Latest data shows that the number of personal pension accounts in China has exceeded 70 million, with the number of available investment products reaching 836. The two years of practice have shown that the design of the personal pension system aligns with China’s national conditions, the policy system is relatively complete, management and operation are generally standardized, information system support is strong, and service delivery is smooth, with the pilot work achieving expected results.

The comprehensive implementation of the personal pension system is an important measure to accelerate the development of a multi-level and multi-pillar pension security system. It is conducive to better leverage the financial management functions of Capital Markets and establish a complete policy system for 'long-term funds and long-term investments.' Subsequently, the China Securities Regulatory Commission will strengthen the supervision of public funds managed for personal pension investments, urging public fund managers to continuously enhance their management and service capabilities to better support the high-quality development of personal pensions.

The first batch of 85 equity index funds has been included in the scope of personal pension investments.

According to the requirements outlined in the 'Notice on the Comprehensive Implementation of the Personal Pension System,' the China Securities Regulatory Commission has promptly optimized product supply, and today has included the first batch of 85 equity index funds in the catalogue of investment products for personal pensions, among which there are 78 products tracking various broad-based indices, and 7 products tracking the SSE Dividend Index, including ordinary index funds, enhanced index funds, and ETF-linked funds tracking indices such as the CSI 300 Index, CSI A500 Index, and Chinext Price Index.

According to industry opinions, index funds have a clear investment style and lower fee levels, and including relevant products is beneficial for enriching investor choices. These products also implement fee discounts, actively benefiting investors. The inclusion of equity index funds further broadens the types of securities available for personal pensions, creating a rich and differentiated product shelf, thereby enhancing the attractiveness of personal pension business.

International experience also indicates that passive index funds, with their four major advantages of low fees, transparency, and risk diversification, have become important tools for Global pension investments.

Specifically, the first advantage is low fees. Pension investment has a long time horizon and focuses on costs. Passive index funds generally have lower fees, which can reduce investment costs and amplify compounding effects in long-term investments, increasing the final amount of pension accumulation.

The second advantage is operation transparency. The investment strategies of index funds are simple, their styles are stable, and their transparency is high. Investors can clearly understand their Hold Positions and performance, which can enhance investors' trust in pension fund management and help them better plan and adjust their pension investment strategies.

The third advantage is risk diversification. Index funds typically hold a large number of constituent stocks, effectively dispersing the risks of individual stock investments.

Advantage four, the potential for long-term good returns. In the long run, broad-based Index and SSE Dividend Index have strong market representation significance, with their rise and fall closely related to economic development. Investing in representative related Index can fully Share the dividends of national economic growth.

Previously, several public fund companies actively applied for their Index Fund and related products. E Fund stated that including Index Funds in personal Retirement Funds can provide a richer and more diverse range of investment options for personal pension Accounts, catering to different risk preferences and life cycle stages. Additionally, the simplicity and transparency of Index Funds help reduce the decision-making difficulty for ordinary investors, enhancing their participation in personal Retirement Accounts, thereby promoting the growth of personal Retirement Business scale and market penetration, further improving China's pension system.

How should investors select Index Funds? Yinh Hao, a fund manager from Bosera Fund's Index and Algo Investment Division, suggests the following approach when allocating personal Retirement products: First, comprehensively assess one's risk preference and capacity for risk; second, select major asset classes based on risk preference and capacity, and determine the proportion of each asset class; finally, determine the specific investment symbol based on factors such as fund product fees, expected returns, and volatility.

Public funds manage over 6 trillion in pension assets.

As representatives of professional institutional investors in the Capital Markets, the public fund industry has now been entrusted to manage various pension assets exceeding 6 trillion yuan, accounting for more than 50% of the entrusted investment scale of China's pensions, creating good long-term returns for various pensions and accumulating rich management experience.

The public fund industry has always placed a high value on personal Retirement Business, taking proactive actions, and actively cooperating in the construction and promotion of the personal Retirement system.

First, accelerate business layout to ensure smooth implementation. In November 2022, regulatory authorities issued supporting rules for public funds investing in personal Retirement, guiding the public fund industry to thoroughly prepare for business and technical needs, successfully completing foundational tasks such as product and sales institution directory determination, and system docking testing, laying a solid industry foundation for the implementation of the personal Retirement system.

Second, 199 different fund products with varying holding periods and risk-return characteristics have been provided for investors. This includes target date funds designed in accordance with investors' retirement timing, as well as target risk funds focused on investors' risk preferences.

Third, implement fee discounts and actively pass benefits to investors. All pension target Funds included in the individual pension catalog will add special shares and implement preferential arrangements for management fees and custody fees to enhance product attractiveness.

Fourth, increase the intensity of policy promotion and interpretation to enhance participation enthusiasm. Fund companies are investing significant resources in the promotion and interpretation of pension policies and in spreading knowledge of pension finance to improve LBX Pharmacy Chain Joint Stock's awareness and acceptance of individual pension business.

The China Securities Regulatory Commission stated that it will strengthen the regulation of public Fund business for individual pension investments in the future, urging public Fund managers to continuously improve their management and service capabilities to better support the high-quality development of individual pensions.

Editor/Somer