Allianz IM unit eyes China for pensions growth-CEO
Michael Diekmann, CEO of Europe's biggest insurer Allianz SE, addresses journalists during the company's annual news conference in Munich, February 26, 2009. REUTERS

Allianz Global Investment (AGI), the funds arm of one of Europe's largest insurers, see growth opportunities in China's burgeoning pensions market, where ageing residents are battling to fund their retirements.

Chief Executive Joachim Faber said the budding industry for Chinese voluntary corporate pensions, known as enterprise annuities, was a market to watch.

China has a very interesting market, it is still struggling with enterprise annuity and has no individual product (to fund retirement), Faber told Reuters.

Enterprise annuities, which some see as China's answer to U.S. defined contribution pension plans, have been designed to help China cope with a possible pensions timebomb as more people retire, leaving fewer in work to finance the pensions of their elders.

Allianz operates in China through a partnership with Guotai Junan Securities, known as Guotai Junan Allianz Fund Management Co, which it set up in 2002.

Faber told Reuters that AGI was already advising a number of Chinese institutional clients but was looking ahead to potential opportunities in serving private individuals who wanted additional retirement income.

AGI is also seeking to boost its pension business by offering inflation protection and post-retirement investments to its traditional customer base in Europe and the United States.

What we have not been able to do so far is really offer, proactively ... retirement solutions for our institutional clients and that is something which I indeed see as a big possibility, Faber said.

AGI managed 1.5 trillion euros ($2,064 billion) in assets at the end of 2010 but Faber reckons there are still gaps to be exploited.

You have almost no inflation-protected products, which will give you real return for your retirement -- (this is) very important in our view particularly if you are of the opinion inflation is going up in the next three to four years, said Faber.

He also sees business opportunities in offering investment options to newly retired people, who have potentially sizeable nest eggs at their disposal.