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China’s pension funds ready for stock investment in 2016

Updated: Oct 27,2015 5:45 PM     Xinhua

China’s pension funds will be ready for investment in stocks and equities in 2016 after the government sets rules to regulate the change, the Ministry of Human Resources and Social Security said on Oct 27.

Officials are investigating how best to transfer funds from local governments to the provincial level and allocating funds to authorized institutions for investment, said Li Zhong, spokesperson for the ministry, at a press conference.

“We’ll push forward for a launch in 2016 and ensure local pension funds are in place for investment then,” Li told reporters.

The State Council finalized guidelines in August allowing pension funds to invest in higher-return products, including stocks and equities. The funds were previously parked in banks or invested in treasury bonds with low yields, provoking calls for change as the country faces increasing challenges in caring for its growing elderly population.

To minimize risk, the guidelines restrict the proportion of funds invested in stocks and equities to 30 percent of total net assets. Provincial-level governments determine the amount to be invested, and only institutions authorized by the State Council can manage and invest the funds.

Around 2 trillion yuan ($315 billion) of the funds’ total assets can be invested in various products, said You Jun, vice minister of human resources and social security, in August.

China’s pension funds, which account for roughly 90 percent of the country’s total social security fund pool, had net assets of 3.5 trillion yuan at the end of 2014.