China to transfer state assets to pension funds in drive to make up for shortfalls
Pilot scheme is latest attempt to tackle problem caused by ageing population
China will begin a pilot programme this year to transfer shares in state-owned firms to social security funds in an effort to make up for shortfalls in the nation’s pension scheme, according to a notice published by the cabinet on Saturday.
The new policy calls for an initial 10 per cent of equity in state firms to be transferred to the national pension fund, with the plan limited to a small number of central and provincial firms in an initial trial to start this year.
China is working to expand the resources of its pension funds as the population ages and obligations rise. Many provinces are already under severe pressure to meet pension repayments.
A recent effort has seen Beijing for the first time allow pension funds, whose investments had been limited to low-yielding bank deposits and treasuries, to invest in stocks and other assets.
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The latest plan would see central and regional social security funds directly holding shares in state-owned companies, allowing retired workers to benefit from the dividends generated by government-owned assets.