Pension Funds to Enter Stock Market in 2016

China will implement new rules on pension fund investments as of 2016, said the Ministry of Human Resources and Social Security (MOHRSS) at a press conference at the end of October.

Officials are studying how best to transfer surpluses of funds from local governments to the provincial level governments and allocate them to authorized institutions to perform investments. Funds will be gathered and transferred through a unified process, said MOHRSS spokesperson Li Zhong.

It is calculated that funds totaling RMB 2 trillion can be invested. As the new regulations stipulate that up to 30 percent of the net assets of pension funds may be invested in the country’s stocks, equity funds, and balanced funds, about RMB 600 billion could, theoretically, go into the stock market. The provincial governments will specify the capital scale, while authorized institutions will decide on the timing of the investment, according to the MOHRSS and Ministry of Finance.

Currently, Chinese pension funds may be invested in bank deposits and treasuries only. According to the new rules, pension funds may also be invested in the country’s major infrastructure projects, stocks, stock rights, stock market index futures, and treasury futures.

By the end of 2014 nine provinces and municipalities had seen the total accumulative balance of the pension funds exceed RMB 100 billion. According to MOHRSS statistics, 852 million Chinese citizens were included under the nation’s pension scheme as of the end of September 2015.