The Chinese government is considering diversifying investment of its pension insurance fund to supplement its pension accounts by improving returns.

 

The Information Times reported on Wednesday that by the end of last year, the balance of China's pension account was just 480 billion yuan (63.16 billion U.S. dollars), while it needed 900 billion yuan to have a full coverage.

 

The Ministry of Labour and Social Security (MOLSS) and the Ministry of Finance jointly drafted management measures governing investment by the fund of individual pension accounts, allowing the fund to invest in more areas than before.

 

The pension insurance fund mainly deposits its capital in large commercial banks, with some invested in long-term projects with moderate returns, such as expressways and railways.

 

Under the new policy, the fund will be able to enter the bond market or even buy mutual funds, the report says, so as to increase investment returns. In addition, professional institutions will be selected to manage individual pension accounts.

 

In addition to social and commercial pension insurance, the government encourages enterprises to solve retirement problems with corporate pensions, according to the report.

 

Over the past few years, the profit rate of the pension insurance fund was 2.18 percent, but the weighted inflation rate was 2.22 percent, indicating an actual depreciation of the fund, according to statistics from the MOLSS.

 

(Xinhua News Agency August 30, 2007)