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Pension funds may enter capital market

By Huang Jingjing  (Global Times)

10:18, December 19, 2011

Analysts yesterday urged authorities to impose stricter regulations on the stock market after officials talked about the possibility of investing the country's huge pension funds in the market.

"The pension funds, corporate annuities and other forms of social insurance funds will need professional services from securities companies to preserve and increase their assets," Guo Shuqing, the newly appointed chairman of the China Securities Regulatory Commission (CSRC), said at an economic forum Friday.

"There are 2 trillion yuan ($315.8 billion) of pension funds scattered across the nation. The national public housing fund has an outstanding capital of 2.1 trillion yuan. If we can find a way to put them into the capital market, it will benefit everyone," Guo added.

His remarks followed those of Dai Xianglong, chairman of the National Council for Social Security Fund, who said in November that authorities are considering the best way for the funds to enter the market.

A report published by the CSRC in August said pension funds are the main investor in the US capital market, with their total stock value accounting for one-third of the total market value.

It recommended China use the US 401(k) system adopted in the 1980s as a reference. It requires employees to deposit part of their incomes into a 401(k) account and use the money on various kinds of investments to earn their pensions.

The pension funds, collected mainly from companies and individuals, are part of China's social insurance system, which also includes funds for unemployment, healthcare and pregnancy.

The Ministry of Human Resources and Social Security stipulates that social insurance funds can only be stored in designated banks or used to purchase national debt before the government hands out rules on any other forms of investment.

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