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The ¡°2+2 Model¡± means that the plan and all duties are jointly operated and managed by two institutions, respectively having two qualifications. With reference to the qualifications of occupational annuity management institutions currently ratified by the Ministry of Human Resources and Social Security, only a corporate trustee institution having both trustee and investment management qualifications and a bank having both, account management and custodian qualifications, may adopt the ¡°2+2 Model¡± to jointly operate the occupational annuity plan. Other forms of organizing the operation of a plan, such as the ¡°2+1+1 Model¡± etc. require the combination of at least three management institutions.
The following analysis and comparison lists advantages and disadvantages of each operational model for the enterprise and the basic capital sum:
| Operational model |
Advantages |
Disadvantages |
| Split-up |
Annuity Council Trustee |
•Information symmetry, better representing the principal¡¯s wills.
•Interest consistency, better serving maximizing the interests of the beneficiary.
•Exempting the trustee management fee.
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•In the absence of the principal easy to cause an insider¡¯s problem.
•Less professional
•The council members assume joint and several liabilities for the management duty of the whole trustee asset. Any individual will be held liable.
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Corporate Trustee
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¡¤Save the clients¡¯s labor, basic material and other resources in managing annuity.
¡¤Having a strong professional capability, and realizing scale effects.
¡¤Convenient for the trustee to independently handle affairs and make provision for necessary fees.
¡¤Further reducing the operational risk of the occupational annuity while improving the safety of operations.
¡¤Integrating the regulatory forces of other professional financial regulatory authorities, forming a joint regulatory system.
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•Possible buck-passing between operating subjects may impair efficiency.
•The corporate trustee may have its rights undercut and thus play an inferior role in conducting its role as a supervising institution.
•If the overall annuity scale is too small, the cost will be relatively high at the early period of operation.
•Diversified regulation may produce flaws in the joint regulatory system.
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| 2+2 Model |
Compared with the ¡°split-up¡± corporate trustee model:
•It saves costs of communication between institutions, improves working efficiency and effectively reduces the error rate in the process of information transmission.
•In terms of market competition, the two institutions may realize a win-win co-operation, and give their respective dual management functions full play, therefore it has more competitive advantages than the split-up model.
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•Since the two concurrent roles have certain interest relevancy, there may arouse a certain suspicion about whether the trustee will fairly, professionally select the most suitable investment manager for operating the basic capital sum.
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Compared with the ¡°split-up¡± council trustee model:
•The personnel working within the trustee management has stronger professional knowledge and skills.
•Less pressure deriving from administrative orders.
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•Information access and exchange. Compared with the council trustee, the corporate trustee does not have an adequate affiliation with the principal no matter in terms of location, contact method, or information access approach as a result of its independent corporate status;
•The personnel engaged in trustee management is therefore less motivated.
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