Pen­sion funds to have low ex­po­sure to share mar­kets

China Daily (Canada) - - BUSINESS - By LI XIANG lix­i­ang@chi­

NCSSF chair­man says body has been en­trusted to look af­ter a to­tal of $52b

Pen­sion fund in­vest­ments will have a rel­a­tively low ex­po­sure to the stock mar­ket to en­sure the safety of the funds, the chair­man of the Na­tional Coun­cil for So­cial Se­cu­rity Fund, Lou Ji­wei, said onWed­nes­day.

He said the NCSSF had signed con­tracts with seven prov­inces and cities to man­age and in­vest lo­cal pen­sion funds on their be­half.

Pen­sion funds worth a to­tal of 360 bil­lion yuan ($52 bil­lion) have been en­trusted to the NCSSF and it has so far re­ceived 137 bil­lion yuan on its ac­count, ac­cord­ing to Lou.

“Given the rel­a­tively shorter

pe­riod of the in­vest­ment con­tracts, our tol­er­ance for volatil­i­ties will be low and the tar­get for the in­vest­ment yield will also be lower,” Lou told re­porter­son­the side­lines of the clos­ing meet­ing of the an­nual ses­sion of the Na­tional Peo­ple’s Con­gress.

Lou, a for­mer fi­nance min­is­ter, said the in­vest­ment ap­proach of the lo­cal pen­sion funds will be con­ser­va­tive and the fund man­age­ment will pri­or­i­tize in­vest­ment safety rather than tar­get­ing high in­vest­ment yields.

“We are aim­ing at a 95 per­cent prob­a­bil­ity that these funds will not see any loss. There­fore, the funds’ al­lo­ca­tion to the stock mar­ket will be rel­a­tively low,” Lou said.

In ad­di­tion to mana g i n g pens ion funds on be­half of lo­cal gov­ern­ments, the NCSSF also serves as the na­tional so­cial se­cu­rity re­serve fund. At of the end of last year, the NCSSF man­aged funds worth more than 1.6 tril­lion yuan, re­ceived from the cen­tral gov­ern­ment fis­cal bud­get as a na­tional strate­gic re­serve to ad­dress the is­sue of a rapidly aging so­ci­ety.

En­trust­ing the pen­sion funds to pro­fes­sional in­vest­ment agen­cies has been seen as a pos­i­tive step by the gov­ern­ment, to en­sure the sus­tain­able growth of the coun­try’s pen­sion cov­er­age.

Un­der the cur­rent pol­icy, a max­i­mum of 30 per­cent of pen­sion funds is al­lowed to en­ter the stock mar­ket. Pre­vi­ously, pen­sion funds in China could only be in­vested in lowyield bank de­posits and gov­ern­ment trea­suries.

Zhu Jun­sheng, a re­searcher at the Devel­op­ment Re­search Cen­ter of the State Coun­cil, said ef­fi­cient and pro­fes­sional in­vest­ment would help ease the pres­sure for pay­outs of the coun­try’s pen­sion funds.

“The ba­sic pen­sion funds are now un­der greater pay­ment pres­sures and face the risk of value loss. A mar­ke­to­ri­ented pro­fes­sional in­vest­ment will be of great im­por­tance to pre­serve and grow the value of the funds,” Zhu said.


In­vestors check stock prices at a bro­ker­age in Fuyang, An­hui prov­ince, on Wed­nes­day. The pen­sion funds’ al­lo­ca­tion to the stock mar­ket will be rel­a­tively low, ac­cord­ing to Lou Ji­wei, chair­man of the Na­tional Coun­cil for So­cial Se­cu­rity Fund.

Lou Ji­wei, chair­man of the Na­tional Coun­cil for So­cial Se­cu­rity Fund

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