What’s new: U.S.-headquartered Principal Financial Group Inc. has acquired a minority stake in China Construction Bank Pension Management Co. Ltd. (CCBP), making it the first foreign company to invest in a bank-sponsored Chinese pension manager.
The U.S. financial services firm has become the second-largest shareholder of the pension manager with a 17.6% stake, which had been approved by the China Banking and Insurance Regulatory Commission, both companies announced on Friday.
Meanwhile, China Construction Bank Corp. remains the majority shareholder despite a reduced stake from 85% to 70%. China’s National Council for Social Security Fund, which used to hold a 15% stake, also saw its position downsized to 12.4%.
The background: Established in 2015, CCBP’s business scope stretches from social security fund management to the employer-sponsored pension segment.
Principal Financial’s acquisition is expected to offer it more opportunities to tap China’s emerging personal pension market.
China rests on a “three-pillar” pension system, namely a state-run basic pension insurance system, employer-sponsored pension plans, and personal pension funds. Grappling with its rapidly aging population, China released a framework in April to develop the personal pension industry, which has triggered a scramble among financial institutions to roll out pension offerings in preparation for what could be a new world of opportunities.
Related: In Depth: Battle Begins for China’s Private Pension Funds
Contact reporter Zhang Ziyu (ziyuzhang@caixin.com) and editor Bertrand Teo (bertrandteo@caixin.com)
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