The mainland's cash-hungry pension fund is set to reap the benefits of the surging stock market, with plans to give it a slice of all equity offerings since the middle of last year. The National Social Security Fund may receive 40.4 billion yuan worth of shares under a draft rule designed to help head off a multitrillion-dollar shortfall in reserves. However, the move sparked a warning it could lead to a slump in mainland markets if the fund decided to sell its holdings. All state companies that floated shares on the stock market since mid-2006 must contribute shares equivalent to 10 per cent of their offering, according to the draft rule. That means 159 state-owned companies would have to transfer 7.1 billion shares to the pension fund. That equates to a big windfall for the fund, considering the benchmark Shanghai Composite Index has gained 120 per cent so far this year. 'The plan has been endorsed by relevant government departments,' a source with knowledge of the matter said. 'The central government is set to press the button.' Beijing is making an all-out effort to increase the pension fund's value in order to cover a rising number of retirees. The fund managed 400 billion yuan in assets at June 30 but the pension system will have a 9 trillion yuan shortfall by 2035, according to a forecast by the World Bank. According to the source, the rule will also apply to future initial public offerings, or share placements by state-owned companies. The mainland's ageing population is prompting the state to set aside more funds in the pension system. There will be at least 234 million people aged over 60 on the mainland in 2020, according to a government report. A fund official said the move could bring 70 billion yuan worth of shares to the fund by next year. 'It is only a baby step since the assets [of 40.4 billion yuan] are just a small portion of state assets,' the official said. TX Investment Consulting strategist Qiu Yanying said: 'It remains to be seen whether the fund wants to sell or not. It will negatively affect the market if the shares are sold.' The mainland enforced a similar rule in June 2001, requiring listed companies to sell state shares and to give the proceeds to the pension fund. But the move caused a market slump, with the central government halting the policy five months later.