The Chinese Pension System
February 12, 2025
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In the previous article, we have already seen how fintech is changing almost every aspect of pension fund management. The fact that technology is in the process of revolutionizing the pension fund industry is no longer a secret. Pension funds do not have any option other than adapting to technology. This adaptation is revolutionary given the fact that pension funds were once thought of as being amongst the most conservative investors.
However, such adaption comes with its own share of pros and cons. This article makes an attempt to enumerate the various pros and cons that pension funds have to offer.
The most important benefits that pension funds gain from the deployment of technology have been listed below:
Investors can make adjustments to their investment plans accordingly. Interactive dashboards can also be used by companies to ensure that investors are made aware of how close they are to their retirement goals. Such communication has the potential to convince investors to increase their allocation toward pension funds.
The power of technology can be leveraged to automate several tasks which are manually undertaken by the fund. This helps them reduce the amount of manpower required to administer the fund and hence lowers their administrative costs.
Technology has also negatively impacted the pension fund universe. There are several disadvantages that pension funds have to face because of the proliferation of technology. Some of the disadvantages have been mentioned below:
Now, the problem is that the regulators do not have jurisdiction over how data is utilized, processed, and secured in other countries. However, if there is a breach of data security, the consequences have to be borne by the customers. Regulators are finding it difficult to create laws for the borderless world which is enabled by technology.
The bottom line is that technology has opened up a whole different world for pension funds. There are many benefits and also disadvantages which never existed in the previous years. Hence, the pension funds which are able to adapt quickly are likely to obtain a sustainable competitive advantage over their peers.
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