Chinese officials mull pension investment vehicle

Some Chinese officials are pushing for a system that would consolidate the US$317 billion stored in pension funds at the local level for at least partial investment into the domestic stock market, The Wall Street Journal reported, quoting people familiar with the matter. China’s securities regulator and other government agencies have discussed forming an entity like the National Social Security Fund, the government-controlled investment fund for the social security system that has generated annualized returns of 9.17% in the decade since it was created. Such a move could boost returns for the pension funds and help to prop up A-shares markets, which have lost about one-fifth of their value so far this year. Local governments currently manage pensions and are restricted to investing them in low-yielding instruments like bank deposits and government bonds. Critics of this system cite local officials’ lack of investment expertise and the potential for corruption and malfeasance on the local level.