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Manulife steps up hiring in China to tap big pensions opportunity

FILE PHOTO: An elderly woman walks on a street in the village of Wudaogang

By Selena Li

HONG KONG (Reuters) - Canada's Manulife Financial Corp plans at least two more top-tier hires in China this month as it targets the pensions business in the fast-ageing society after taking full control of a joint venture, senior executives said.

After becoming in November the first foreign financial firm to receive regulatory approval to wholly own a funds joint venture, Canada's largest insurer has shaken up the unit's management by appointing a new chairman and an interim general manager, and, for the first time, a chief operating officer.

It is now hiring for two roles - a general manager to lead the unit after a transition period and a newly created role of deputy general manager for fixed income - which it hopes to fill before the end of March.

Having 100% ownership of a local unit with access to China's newly launched private pension scheme will help Manulife accelerate its plans to tap the retirement business opportunity, Paul Lorentz, CEO of Manulife Investment Management (Manulife IM), told Reuters in an interview last week.

"There's a massive retirement funding gap (in China), particularly relative to other developed markets," said Lorentz. "I think we have an opportunity to really help the government, the regulator, shape the industry."

A declining and rapidly ageing population in China is raising alarm about a looming pension crisis in the country, with one state-run academic institution warning that the public pension system will run out of money by 2035.

China's 1.4 billion population shrank last year for the first time in 61 years. Its National Health Commission expects the cohort of people aged 60 and over to rise from 280 million to more than 400 million by 2035 - equal to the entire current populations of Britain and the U.S. combined.

According to Lorentz, the ratio of China's pension assets against its gross domestic product is 10%, in sharp contrast to 171% for the U.S.

In a bid to address some of the shortcomings of the public and corporate safety nets, China rolled out a private pension system in November across 36 cities, allowing individuals to open retirement accounts at banks to buy pension products ranging from deposits to mutual funds.

A flurry of foreign financial firms have qualified to participate in the scheme, and several of them, including Chinese ventures of JPMorgan, Warburg Pincus and UBS, are gearing up to expand their retirement offerings in the country's $3.94 trillion funds market.

China was already a bright spot for Manulife, with mutual fund assets run by the joint venture growing by nearly 30% last year. Globally, its assets under management shrank by 8% in 2022 to $745 billion due to volatile markets.

To grow private pension assets is "a primary focus" for the firm in China, and "the growth of that will be enormous", said Michael Dommermuth, the company’s head of wealth and asset management in Asia.

(This story has been corrected after Manulife clarifies that the company is hiring a general manager to replace the interim one and that it has already hired a chief operating officer, in paragraphs 2 and 3)

(Reporting by Selena Li; Editing by Muralikumar Anantharaman)