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Entrusted management of Guangdong pension
By Louise Ho |
March 21, 2012, Wednesday
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Online Edition
Online Edition
THE National Council for Social Security Fund, which manages the national pension fund, stressed today they are still rely on fixed income investment as main investment options for Guangdong Province's 100 billion yuan (US$15.9 billion) social security fund.
The fund rebuked media reports that most or all the funds would be invested in shares, as the majority of the funds will be invested in fixed income assets, such as state treasury bond, bank deposits, corporate bond and financial bond.
Since 2006, the fund has been receiving good returns from managing nine local pension funds, a spokesman for the fund said today.
"We will take a more prudent investment approach to Guangdong's pension fund, and promises pension fund holders in Guangdong will get returns not lower than interest from bank deposits of the same period," the spokesman said.
The NCSSF said Tuesday it has received the approval of the State Council to manage Guangdong's pension funds for two years, the first trial run of local pension funds by the NCSSF.
Analysts said the example of Guangdong will be followed by other provinces that have a large sum of local pension fund to manage.
"If successful, the first trial run of local pension mandates may unlock the door to pools of provincial pension capital in need of more efficient allocation," said research company Z-Ben Advisors.
As the majority of local pension funds lack of professional investment management, these assets are depreciating in bank deposits under high inflation rate, said the report by Z-Ben.
Besides Guangdong, Jiangsu, Zhejiang and Shandong are the only provinces with over 100 billion yuan in pension assets, and the three are tipped by Z-Ben as the next in line to outsource their pension assets to NCSSF.
Regulators feel the urgency to increase investment return as 12 cities and provinces are already struggling to meet current liabilities, the report said.
Shanghai is among the 12 with pension fund assets in the red. Despite being the country's financial center, Shanghai's pension fund assets only amounted to 46.2 billion yuan by the end of 2010.
Shanghai Party chief Yu Zhengsheng said earlier that the Shanghai government has to subsidize over 10 billion yuan on the city's pension fund.
After the national pension fund is allowed to manage Guangdong's capital, Z-Ben expected there will be many opportunities for financial firms to tap into other provincial pension funds.
NCSSF said on March 15 that its assets totaled 868.9 billion yuan as of the end of 2011.
In terms of investment breakdown, direct investments were 504.2 billion yuan, or 58 percent, while indirect investment was 364.7 billion yuan, or 41.97 percent, NCSSF president Dai Xianglong said in early March.
The fund rebuked media reports that most or all the funds would be invested in shares, as the majority of the funds will be invested in fixed income assets, such as state treasury bond, bank deposits, corporate bond and financial bond.
Since 2006, the fund has been receiving good returns from managing nine local pension funds, a spokesman for the fund said today.
"We will take a more prudent investment approach to Guangdong's pension fund, and promises pension fund holders in Guangdong will get returns not lower than interest from bank deposits of the same period," the spokesman said.
The NCSSF said Tuesday it has received the approval of the State Council to manage Guangdong's pension funds for two years, the first trial run of local pension funds by the NCSSF.
Analysts said the example of Guangdong will be followed by other provinces that have a large sum of local pension fund to manage.
"If successful, the first trial run of local pension mandates may unlock the door to pools of provincial pension capital in need of more efficient allocation," said research company Z-Ben Advisors.
As the majority of local pension funds lack of professional investment management, these assets are depreciating in bank deposits under high inflation rate, said the report by Z-Ben.
Besides Guangdong, Jiangsu, Zhejiang and Shandong are the only provinces with over 100 billion yuan in pension assets, and the three are tipped by Z-Ben as the next in line to outsource their pension assets to NCSSF.
Regulators feel the urgency to increase investment return as 12 cities and provinces are already struggling to meet current liabilities, the report said.
Shanghai is among the 12 with pension fund assets in the red. Despite being the country's financial center, Shanghai's pension fund assets only amounted to 46.2 billion yuan by the end of 2010.
Shanghai Party chief Yu Zhengsheng said earlier that the Shanghai government has to subsidize over 10 billion yuan on the city's pension fund.
After the national pension fund is allowed to manage Guangdong's capital, Z-Ben expected there will be many opportunities for financial firms to tap into other provincial pension funds.
NCSSF said on March 15 that its assets totaled 868.9 billion yuan as of the end of 2011.
In terms of investment breakdown, direct investments were 504.2 billion yuan, or 58 percent, while indirect investment was 364.7 billion yuan, or 41.97 percent, NCSSF president Dai Xianglong said in early March.
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