China pension fund allowed to invest in stock market

Senior citizens chat at a retirement home in Beijing. [Photo/Xinhua]

BEIJING - China's State Council published the final guideline on investment for the country's massive pension fund on Sunday, effectively opening the gate for more diversified and riskier products.

The final plan, released after considering public opinion, allows the pension fund to be invested in new products, including domestic stock markets, but restricts the maximum proportion of investments in stocks and equities to 30 percent of total net assets.

The fund will also be used to participate in major projects and purchase shares in state-owned enterprises to gain long-term yields.

The move is intended to create more value for the massive fund, which was previously parked in banks or invested in treasury bonds with low yields, a condition that has long spurred calls for changes as China faces a huge challenge in caring for its increasing elderly population.

While pushing for diversified investments, the State Council stressed an "active and cautious" approach in the process. "The management of the funds must prioritize safety and firmly control risks," it reiterated.

China's pension fund, which accounts for roughly 90 percent of the country's total social security fund pool, had net assets of 3.5 trillion yuan ($547 billion) by the end of 2014.