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Corporate Annuity


 

Corporate annuity refers to a supplementary old-age insurance system contributed by both enterprises and employees in addition to the compulsory basic old-age insurance. It is the second pillar of the old-age insurance system in China, which aims to ensure that retired employees can still enjoy a high living quality.

Objective

For enterprises: Relief employees' concern about living after retirement, thus enable enterprises to attract, motivate and retain talents; enrich the motivation and constraint mechanism of enterprises, thus facilitate to improve cohesion; enjoy tax benefits, and reduce benefit costs reasonably.

For employees: Increase income after retirement to ensure the quality of life; provide an investment channel for wage; enjoy the high yield of China's rapid economic development.

Operation Model

China's current corporate annuity takes the form of defined contribution plan, where both enterprises and employees contribute to it, and it is managed in the form of personal accounts. The corporate annuity fund is operated in accordance with the market mechanism, and is allowed to invest in the capital market.

Duties of Corporate Annuity Fund Manager

Trustee

Corporate annuity trustee is a corporate annuity council or a legal custody entity, like a pension management company complying with the state provisions, entrusted to manage corporate annuity fund. The trustee is responsible for selecting, supervising, and replacing account managers, custodian, investment managers and intermediary service organizations, developing corporate annuity fund investment strategies, compiling corporate annuity fund management and financial accounting reports, supervising the corporate annuity fund management, providing corporate annuity fund management reports to regulatory authorities, charging fees, and paying benefits.

Account manager

Account manager refers to professional institutions entrusted by the trustee to manage corporate annuity fund accounts. According to the account management contract, the account manager is responsible for recording payment, investment and expenditures of enterprises and employees, recording changes in the corporate annuity fund property, calculating corporate annuity benefits, and providing account enquiries and reports.

Custodian

Custodian refers to commercial banks or professional institutions entrusted by the trustee to be in custody of property of corporate annuity fund. According to the custody contract, the custodian is responsible for safekeeping and supervising corporate annuity fund property, including opening a separate account to keep fund property, allocating annuity property against the trustee instructions, handling settlement and delivery in time, carrying out accounting and valuation, supervising investment management and providing relevant reports.

Investment manager

Investment manager refers to professional organizations entrusted by the trustee to invest and manage corporate annuity fund property. According to the investment management contract, the investment manager is responsible for carrying out investment for corporate annuity fund property entrusted, and providing value-maintenance and value-added services.

Investment Scope of Corporate Annuity Fund

According to Article 47 of Interim Measures on Corporate Annuity Funds Management, the investment of corporate annuity fund property, based on market prices, should meet the following requirements:

The ratio of investing in bank current deposits, central bank bills, short-term bond repo and other liquid products and monetary market funds, shall not be less than 20% of the net asset value of the fund;

The ratio of investing in bank term deposits, agreement deposits, T-bonds, financial bonds, corporate bonds and other fixed-income products as well as convertible bonds and bond funds, shall not be higher than 50% of the net asset value of the fund. Among them, the ratio of investing in government bonds shall not be less than 20% of the net asset value of the Fund;

The ratio of investing in stocks and other equity products as well as investment insurance products and equity funds, shall not be higher than 30% of the net asset value of the fund. Among them, the ratio of investing in stocks shall not higher than 20% of the net asset value of the fund.

Corporate Annuity Service Flow

Corporate Annuity Service of Bank of China

I. Corporate Annuity Consulting

II. Account Management

Information registration

Register corporate annuity information in the account management system of Bank of China. The system supports setting up a variety of contribution rules, attribution rules and expenditure rules, and allows employees of different classes to enjoy different types of corporate annuity benefits.

Account creation

Create corporate accounts and personal accounts to separately record basic information of enterprises and employees, as well as assets information, contribution information, investment information and expenditure information of corporate annuity plan.

Annuity contribution

Support various annuity contribution frequencies (monthly, quarterly, half-yearly or yearly), and allocate contributions to personal and corporate sub-accounts in accordance with the contribution rules.

Benefit payment

Support annuity benefit payment due to retirement, residence abroad, death, invalidity of employees, as well as plan transfer and termination, and record payment reasons in the system.

Account transfer

Support account transfer resulting from the transfer of personal accounts due to changes in workplace or in annuity plan.

Investment conversion

In case there are several investment portfolios for the corporate annuity fund, annuity investment portfolio can be converted according to the needs of trustees or employees.

Information disclosure

Disclose information through corporate annuity service system of Bank of China by statement disclosure, information enquiry, data interfaces and other means.

III. Custodian Service

Corporate annuity assets custody

According to categories of investment products, separately open entrusted property custody accounts, investment asset custody accounts, inter-bank bond settlement agency accounts, and securities accounts of Shanghai and Shenzhen exchanges in the name of corporate annuity plan, and keep the specimen stamp and assets.

Fund clearing

After investment of the corporate annuity done by the investment manager, handle fund clearing for annuity, including checking investment orders, and categories and its ratio, as well as allocating funds on time.

Accounting and valuation

At the end of each working day, conduct accounting for investment transactions of the day according to relevant laws and regulations, and estimate value of total corporate annuity assets.

Investment supervision

In accordance with relevant laws and regulations, Bank of China supervise and audit investment scope, investment ratio, investment restrictions, prohibited investment actions, financial information, net asset value, trading volume of each seat and instructions and notices of investment managers, relevant contents of investment assets operation report, and supervision covers ongoing control procedures and compliance risk disclosure.

Custody report

Work out custody reports on a regular or irregular basis, and prepare analysis reports on the use of custody assets, investment returns, and performance of investment managers.

Performance evaluation

Assess the investment performance of investment managers according to average performance of the market, and provide references for enterprise to select and supervise investment managers.

Risk analysis

Make a variety of technical risk analysis for corporate annuity, including liquidity risk analysis, and investment ratio control analysis.

Information consultation

Relying on a network of more than 700 overseas and 10,000 domestic branches, Bank of China will provide global information consultation service for enterprises, including overseas and domestic financial investment advisory and analysis and forecasting reports on economic development, providing reference for the investment decision of enterprises and annuity council.

Cash management

Bank of China is experienced in cash management against large enterprises. For collection and disbursement of corporate annuity, Bank of China can provide cash management service, save the time of fund in delivery, and improve annuity operational efficiency.

Proxy voting

After investment managers invest in a certain size of stock, Bank of China can provide enterprises with listed company proxy voting service based on the commission of trustees or enterprises.

Corporate Annuity Qualification of Bank of China

Century Brand Reputation

Bank of China has gone through a hundred years of baptism and has been always following the service tenet of integrity and stability in business operation, casting valuable intangible assets and brand value. Bank of China brand has been recognized by the State Administration for Industry and Commerce (SAIC) as the first famous trademark of China banking industry. With sound management, rich experience, advanced products and high-quality services, Bank of China attracts and owns numerous large, excellent corporate customers at home and abroad, and obtains a high degree of market recognition.

Global Service Network

Bank of China is the unique commercial bank in China with branches on five continents of the world, with more than 800 offices in 27 countries and regions, and has established correspondent banking relationships with more than 4,000 banks in 190 countries (regions) of the world and all domestic banks. It has more than 10,000 domestic branches. With large service security system, Bank of China can provide convenient withdrawal services for customers who live abroad after retirement, and provide contribution and withdrawal services for employees of multinational enterprises who participate in corporate annuity plan in the country but work abroad temporarily.

Diversified Financial Services

Under the separated operation system of Chinese financial industry, Bank of China is the unique domestic commercial bank that has achieved mixed operation abroad. Bank of China, through its wholly owned subsidiaries of Bank of China International Holdings, Bank of China Group Insurance and Bank of China Group Investment, has established a comprehensive financial service platform, enabling Bank of China to provide a package of comprehensive banking services, including corporate annuity, credit, wealth management, clearing, settlement, insurance, securities and investment banking. BOCI-Prudential Asset Management Limited, a unit of Bank of China, as one of the main service company for the trustee, account management, asset management of Hong Kong Mandatory Provident Fund, has accumulated rich experience and techniques in corporate annuity management services for many years. The experience and techniques provide strong support for Bank of China to conduct corporate annuity business within the country.

Professional Annuity Team

Among more than 800 corporate annuity management practitioners in Bank of China, staff with graduate degree or above account for 26%, and with overseas work experience account for 46%. Bank of China has formed a corporate annuity management team composed of experts covering the fields of finance, securities, intensive computation of insurance, mutual funds, accountancy, law, human resource management, and IT, and collected rich experience of the corporate annuity business management and services at home and abroad, providing specialized, standardized, and personalized services for customers.

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