|
BEIJING, July 8 (Xinhuanet) -- China's pension fund system is likely to be revamped. Current returns are too low. The authorities are considering investing as much as 30 per cent of the fund in the stock market. But ensuring the safety of funds concerning hundreds of millions of people is a major challenge.
China's pension fund will likely be invested in the stock market. That's according to an official draft guideline released last week.
The Ministry of Human Resources and Social Security said over 320 billion US dollars can be used for multifaceted investments. The move aims to tackle the fund’s shrinking value, amid a fast-growing elderly population.
"The current regulation stipulates that the pension fund is only allowed to be deposited in banks or invested in treasury bonds. This has played an important role in safeguarding its safety, but the investment channels are relatively restricted. That's why the fund has been depreciating and people feel less enthusiastic in paying into pensions," Ministry Of Human Resources & Social Security spokesman Li Zhong said.
The suggested policy changes have received mixed reviews from the public.
"I heard the news from the radio. The pension fund's investment is a big deal, as we retirees all depend on it. So it's very important to ensure no loss of value. The government needs to be careful in choosing a good time to invest the pension," Beijing retiree Ms. Xu said.
"I feel worried about putting the pension fund into the stock market, as the Chinese bourses are immature and unstable. I hope the government could invest more in the economy such as infrastructure," Beijing retiree Wang Jingxiao said.
Chinese 65 years old and up make up over 10 percent of the population. By 2050, they could account for a third. The safety of the pension fund concerns the welfare of hundreds of millions. And the government now faces a major challenge in ensuring the safety of the fund’s investment and the trust of those who depend on it.
The new guideline stipulates a 30-percent ceiling for stock market investment.
Diversified investment channels will be used to reduce potential risks. They include government and corporate bonds, major national construction projects and leading state-owned enterprises.
"The pension fund will only be invested domestically and into mature investment programs. Besides, a risk reserve will be set up to offset the possible losses. Through these measures, we believe the safety of pension fund investment can be guaranteed," Li said.
An expert explained how other countries are dealing with pension fund investment.
"One conservative way is to buy fixed income bonds like in the US...." "Another way is to set strict limitations on the programs and percentages of the investment, like what the Latin American and Central and Eastern European countries are doing. These countries share a similar investment environment with China and have managed the risks well," Fang Lianquan, secretary-general of Center For Int’l Social Security Studies, said.
Dr. Fang says China needs to diversify investment channels and impose strict supervision and regulation. He also stressed transparency in management. Risk can never be completely eliminated, but the hundreds of millions insured deserve best practices.
(Source: CNTV.cn)
