The national pension fund was expected to boost returns after expanding its investment scope to include local government debt and other products, deputy finance minister Wang Baoan said on Friday, as he joined independent researchers to warn about a possible shortfall in payments as the population ages. Wang also expressed concern about the high risks involved in investing in the stock market, saying there was no plan to increase the share of the 1.53 trillion yuan (HK$1.9 trillion) in funds used to buy publicly listed stocks. The leadership has realised the urgent need to expand the pension fund to cope with challenges brought on by an ageing population. Some researchers estimate the shortfall in the pension fund may reach close to 40 per cent of gross domestic product by 2033. With an expanded investment scope, the fund's "general return will improve under normal circumstances, on the premise of stable economic growth and financial market performance", Wang said. Last year, the social security fund returned 11.43 per cent. "We aim to achieve high operating efficiency and high returns for the fund," he said. "However, it is not our only goal." Wang stressed that the fund would not lower its criteria for selecting investment targets, and would continue to require a credit rating of at least BBB. On Monday, the State Council decided to allow the National Social Security Fund to invest in local government bonds, spending at most 20 per cent of its money buying corporate and local debt, double the previous share. The fund can also invest in the interbank market and expand investment in city infrastructure and public housing projects. But Wang said the fund would not buy debt issued by local financing platforms, vehicles that local governments have set up to sidestep funding limits in the past decade. From this year, the mainland began to merge the pension system for public sector employees with the national pension pool, adding about 40 million workers to the system. The government is also considering other measures to tackle the ageing problem, such as extending the retirement age and using more profits from state-owned enterprises to replenish the fund. The working population aged between 16 and 60 shrank by 3.7 million last year, its third straight year of decline. The mainland has also discovered that the supply of cheap migrant labour is not as abundant as it was in previous years, when the economy surged at the world's fastest pace.