The Chinese government will allow its basic pension fund to invest in new assets, including domestic stock markets, said the official press agency of the People's Republic of China.
In a statement Sunday, China's State Council said the move opens up pension fund investment for “more diversified and riskier products.”
The final guidelines on investment, which follow public consultation, restrict allocations in equities to 30% of total net assets. The fund also will participate in major projects, and will purchase shares in state-owned enterprises, said the statement.
It is intended that the move will create more value for the pension fund, which is invested in low-yielding treasury bonds and held in banks, “a condition that has long spurred calls for changes as China faces a huge challenge in caring for its increasing elderly population,” the statement said.
However, any diversification of investments must be undertaken with an “active and cautious” approach, and “the management of the funds must prioritize safety and firmly control risks,” the statement said.
The country's pension fund accounts for about 90% of China's social security fund pool, and had 3.5 trillion yuan ($569.8 billion) of assets at Dec. 31.
Spokesmen for China's State Council could not be reached for comment by press time.