The central government will start soon to choose fund managers for the nation's corporate pension funds, paving the way for the funds to start investing in equities in a move that may help to boost the lagging stock market.
Brokerages with at least one billion yuan (HK$942.6 million) of registered capital may apply to manage the funds under rules published on the Ministry of Labor and Social Security Web site that take effect March 1.
The minimum capital requirement for fund management companies, trust and investment companies and insurers' asset management units is 100 million yuan.
Beijing is rolling back its cradle-to-grave welfare system and setting up a retirement insurance system similar to the United States 401-K plans, under which employees put in a certain portion of their salaries, matched by contributions from their companies.
About 22,000 mainland companies have set up pension funds, with a combined 50 billion yuan under management, the China Securities Journal reported Saturday.
These funds are now managed by either local governments or financial institutions, which will have to apply to the ministry for licenses after the new rules take effect.
Custodians for the pension funds must have at least five billion yuan of net assets under the new rules. Fund managers will have to reapply to the ministry when their management licenses expire in three years.
The rules do not spell out the proportion of capital that corporate pension funds will be permitted to allocate for stock investments.
China's benchmark
Shanghai Composite Index gained 4.6 percent last week and the
Shenzhen Composite Index rose 2.6 percent on expectations the government will work out market-boosting measures to bolster trading.
The
Shanghai and
Shenzhen indexes were the worst performers last year among the world's major equity markets tracked by Bloomberg after the government's cooling measures to rein in economic growth and a slew of brokerage failures.
Applications for licenses to manage the corporate pension funds will be vetted in the middle of May, the China Securities Journal said in the report, citing Chen Liang, an official from the Ministry of Labour and Social Security.
The funds mainly invest in bank deposits, bonds and insurance products, the newspaper, a publication affiliated with Xinhua News Agency, said.
Funds under management at China's occupational pension funds will grow more than 10-fold to 500 billion yuan by 2010, the
Shanghai Securities News reported June 10, citing Sun Jianyong, an official with the Ministry of Labor and Social Security.
Occupational pension funds are separate from the mainland's 132.5 billion yuan national social security fund.
