The occupational annuity fund management contract is an important document in the occupational annuity business process. The standard and mostly chosen model to operate EA is for an enterprise to select a proper institution with management qualification to serve as the trustee, the now client signs a trustee management contract with the trustee, and the trustee then selects custodian, account manager and investment manager. Afterwards custody contract, account management contract and investment management contract are signed with them respectively. In the case that the trustee concurrently serves as the investment or the account manager, the contents of the investment management contract or the account management contract may be enclosed in the trustee management contract. The custody contract, the account management contract and the investment management contract are collectively called entrustment contracts. In general, the occupational annuity fund management contract stipulates the rights and duties of each participant and service provider in the occupational annuity in the form of a standard legal document.

For the principal of occupational annuity, it is essential to select the trustee, since it may directly affect its occupational annuity returns and follow-up operations of the occupational annuity fund plan. Correspondingly, the contract most influential is trustee management contract. It has certain particularity in so far as the principal shall have a rough understanding of the relevant contracts in advance, and define its own rights and duties.

The main clauses concerning the interests of the principal in an occupational annuity contract include:

1. Provisions on the Effective Term of the Contract

The term of ¡°occupational annuity fund trustee management contracts¡± is generally long, determined by the particularity of the occupational annuity fund. Occupational annuity generally gives priority to moderate investments; therefore the trustee shall assure the stability of the investment portfolio operating period. The investment manager again can then match those investment products with long investment durations and relatively high returns at the time of investment operations. Another fact that must be paid attention to is that a certain transition period from the formulation of an investment strategy to the realization of investment income is needed and as a result, the recommended term of a contract is 3 or 5 years.

The trustee contract and the entrustment contract have a relationship like that between a master and his subordinate; therefore in general cases, the effective terms of both these parties shall be consistent.

2. Provisions on Rights of the Principal

(1) Right to be informed

The principal has the right to learn about the management, income and expenditures of the fiduciary property the trustee handles, and can ask the trustee to answer inquiries. Another right the principal can enact is to examine, excerpt or copy any information of financial accounts related to the fiduciary property and to deal with any other document of the trustee management business.

(2) Right of Revocation

If the trustee manages the fiduciary property in breach of fiduciary duty or causes a loss to the fiduciary property as a result of violating its management rights and duties or mishandling the trustee management business, the principal has the right to apply to the People¡¯s Court for revoking the conduct. Furthermore this party has the right to require the trustee to recover the original state of the fiduciary property or to make compensations.