China Life Insurance (Group) Co has announced that it had received a notice from its controlling shareholder, the Ministry of Finance, directing that a stake of 10% in China Life be transferred to the National Council for Social Security Fund (NCSSF).
The transfer is made in compliance with a document issued by the State Council in 2017 for state assets, including shares of state-owned companies (SOE) and financial institutions, to be transferred to social security funds, as an aging society puts pressure on social pension payments. The stake to be transferred is 10%.
China Life Insurance Group said that the procedures for the equity transfer will be implemented in accordance with relevant laws and regulatory requirements, and final completion will be subject to regulatory approval.
Previously, China Re, China Taiping Group, PICC, ICBC, Agricultural Bank, Bank of Communications, and other state-owned banks and insurers have successively announced similar transfers of 10% of their shares to the NCSSF.
The transfers have been stepped up since former finance minister Lou Jiwei said in March that the implementation of the State Council’ directive had been “too slow”. In another document that was released in September, the central government declared that the SOEs it managed should aim to transfer 10% of their state-owned equity by the end of this year, though the deadline can be extended to the end of 2020 if the SOEs face difficulties doing so.
The transfers do not change the current state-owned asset management system, and the NCSSF as a long-term financial investor obtains dividends from the transferred shares, and has the authority to dispose of them. The NCSSF does not engage itself in the management and operations of the SOEs. Its main role is to plug possible pension shortfalls.