State pension fund grows 10pc

PUBLISHED : Friday, 20 May, 2011, 12:00am
UPDATED : Friday, 20 May, 2011, 12:00am


Assets of the mainland's national pension fund expanded 10 per cent last year to 856.7 billion yuan (HK$1.02 trillion), helped by contributions from state-owned companies and a modest investment return.

The National Social Security Fund said yesterday it achieved a 4.23 per cent, or 32.1 billion yuan, investment return last year, including a realised gain of 42.6 billion yuan and unrealised loss of 10.5 billion yuan.

Since the fund's establishment in 2000, the annual average investment return has stood at 9.17 per cent, compared with average annual inflation of 2.14 per cent, the fund said in its annual report.

Economists said the huge assets controlled by the fund and its influence on international capital markets called for a transparent and scientific system for performance evaluation.

'With such huge investable capital, the fund is closely watched by all kinds of participants in domestic and overseas markets,' Chinese Academy of Social Sciences researcher Yi Xianrong said.

'The fund should have a transparent benchmark so the public can measure its performance.'

Fund chairman Dai Xianglong has said the fund aimed to add more than 100 billion yuan this year and projected the fund would hit one trillion yuan in 2011 and 1.5 trillion yuan by 2015.

The mainland stipulates that state-owned enterprises transfer 10 per cent of their shares to the pension fund before their initial public offerings. Last year, the fund received 32 billion yuan in shares from companies' domestic listings and 6.8 billion yuan from those listed overseas.

Government subsidies, contributions from workers and employers, and the lottery are other sources for the fund.

'Compared with China's sovereign fund China Investment Corp, the pension fund's returns are not as high,' Yi said. 'However, this looks reasonable because the pension fund should not pursue returns as aggressively as the sovereign fund.'

The US$300 billion CIC, which makes outbound investments with China's foreign reserves, might post a similar investment return for last year as the 11.7 per cent in 2009, its chairman Lou Jiwei said in March.

The Social Security Fund is allowed to invest up to 30 per cent of its assets in stocks and no more than 10 per cent in private equities. It can invest as much as 20 per cent of its assets overseas.

The fund did not release its investment portfolio yesterday. Qualified foreign institutional investors' A-share funds lost an average 10.9 per cent last year when the A-share market fell almost 15 per cent, according to Lipper, provider of information on mutual funds.

The fund's investment return was 16.1 per cent in 2009, with total assets of 776.5 billion yuan at year end.