China Citic Bank Corp and foreign partner Banco Bilbao Vizcaya Argentaria plan to launch a mainland pension fund as Beijing considers tax breaks to boost the development of the nascent company pension policy.

Citic Bank, in which BBVA bought a 5 per cent stake last year, hopes to capitalise on the Spanish lender's expertise in Latin America, where it manages US$50 billion worth of pension assets for more than 17 million customers.

"BBVA and Citic Bank are negotiating over introducing pension funds into the Chinese market, with a focus on enterprise annuities," said Agustin Vidal-Aragon, a director of BBVA pensions and insurance in America, on the sidelines of a pension forum in Beijing. "It is too early to talk about specific targets."

The mainland's enterprise annuity scheme - private pension policies set up by companies for retired workers - was worth only US$11.8 billion at the end of last year but is expected to grow to US$1.8 trillion by 2030, according to World Bank forecasts.

Chen Liang, a director of the fund supervision department at the Ministry of Labour and Social Security, said the Ministry of Finance and the Tax Bureau should work towards introducing tax breaks on individual contributions to encourage more enterprises and employees to join the scheme. At present, tax exemptions are controlled by local authorities and related policy is vague.

"A unified tax-exemption policy is crucial to developing China's nascent company pensions market," Mr Chen said.

He said the regulatory framework for pension funds remained incomplete and management standards had to be improved. "Expertise in managing private pensions is not high enough; we need professional teams of managers," he said.

The mainland is shifting its responsibility on providing the cradle-to-grave social security system to the private sector, allowing professionals to handle corporate pension funds.

Local financial firms such as Ping An Insurance and China Everbright Bank are selling enterprise annuity products. Four foreign banks - ING, Deutsche Bank, Fortis Group and Bank of Montreal - also have won licences.

BBVA's expertise in managing private pension schemes in the developing economies of Latin America also gave it an advantage over other foreign competitors, Mr Vidal-Aragon said.

The mainland would particularly benefit from its experience in selling private pensions to consumers unfamiliar with the product, he said.

The mainland's transition from a pooled pension system to private pensions was similar to the reforms made in many Latin American countries during the 1980s and 90s.

"Latin America has been at the vanguard of the development of private pensions throughout the world," said Richard Hinz, a pension policy adviser at the World Bank.

Vicente Rodero, a director of BBVA South America, also confirmed reports that the bank would seek to increase its investments in the mainland and Hong Kong.

"I expect we will raise our stake in Citic Bank to 10 per cent and our stake in Citic International Financial Holdings to 30 per cent next year," Mr Rodero said.