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CPPIB to help China reform pensions

The Canadian institution has agreed to offer intellectual support to China’s economic planners as they seek to shake up the pension sector.

The Canada Pension Plan Investment Board has signed a memorandum of understanding with the National Development and Reform Commission (NDRC), China’s economic planning agency, to help the country reform pensions and boost the senior care industry.

CPPIB said it would offer its expertise in assisting Chinese policymakers as they seek to meet the challenges created by China’s aging population, including reforming pensions and promoting foreign investment in the domestic senior care industry. Joint training, workshops and research will also be conducted to help the NDRC formulate policies.

“As we continue to deploy capital in important growth markets like China for the benefits of CPP contributors and beneficiaries, there is significant value for a long-term investor like CPPIB in sharing information, experience and successful practices with policymakers as they work towards improving policy framework,” said Mark Machin, president and chief executive of CPPIB, in a statement.

CPPIB, which has an office in Hong Kong, is currently exposed to China’s real estate and logistics sectors as well as public equities. Last December, it invested $500 million in the initial public offering of Postal Savings Bank of China, one of the country’s largest retail banks.

The pension recently amalgamated its real estate, agriculture and infrastructure groups under Graham Eadie. The fund has bought a 40 percent of Glencore Agri, is invested in Canadian grain handler Viterra and owns a portfolio of domestic farmland.

In August 2015, the State Council of China published guidelines allowing pension funds to invest in more diversified and riskier products, such as domestic equities, major construction projects and shares in other state-owned enterprises, in a bid to make it easier for the combined 4 trillion yuan pension pool to generate yield.

Insurance companies in China were recently allowed to invest in infrastructure projects across all sectors, including PPPs, after Beijing revised the rules in July this year.

Reporting by Nia Tam.