Boost China pension system with IPOs -MFS chairman
HONG KONG, Mar 30 (Reuters) China should put a 20 per cent stake from all newly listed state companies into its national retirement system to help alleviate a ''pension time bomb'', MFS Investment Management Chairman Robert Pozen said on Thursday.
The move, if done in tandem with a 10-year lock-up, could help improve corporate governance at former state-owned Chinese companies added Pozen, a Democrat who served on U.S. President George W.
Bush's Social Security commission.
''Some significant block would be sufficient to make that fund be a good monitor as a shareholder,'' Pozen said in a roundtable interview in Hong Kong.
China's billion National Social Security Fund, set up to manage a grossly underfunded pensions system, is currently financed partly by 10 per cent of the proceeds of state firms that list internationally, MFS said.
But Pozen said a larger stake from both domestic and international initial public offerings is needed to better fund the plan.
He said putting the shares directly into the welfare fund with a 10-year lock-up would also mitigate investor fears that government-held shares could be dumped on the market.
''People don't feel that good about the government as a shareholder. They're always worried; 'What's the government going to do?' So if you had someone with a long-term economic interest, I think that other shareholders would react favourably,'' he said.
Pozen said ideally with such large shareholdings, the fund's administrators could begin operating like big institutional investors elsewhere and advocate shareholders' rights.
Corporate governance at many Chinese companies is considered weak by international standards.
MFS Investment Management, a unit of Canadian insurer Sun Life Financial Inc., manages more than 2 billion in assets.
REUTERS SD BD1908