Revamping China’s National Pension

China’s government will professionalize the investment scheme for the nation’s pension plan in the next five years, according to officials.

To address the pension fund’s low returns and an aging population, the minister of human resources and social security said the government will propose to diversify the fund’s investments—including buying equities for the first time—and have it be “run by professional investment agencies on market rules.”

“The pension fund faces tremendous pressure in terms of breaking even in future,” Yin Weimin continued. “The future investments of the fund will be diversified to avoid putting all the eggs in one basket.”

Under the current rules, China’s pension fund can only be invested in treasury bonds and bank deposits, leading to an annualized yield of around 2% over the past few years, according to the the China Radio International. 

The government said the pension fund has been losing money as low returns fell below the rate of inflation.

Yin said the new investment plan would include allocations to not only “projects with good prospects,” but also to the stock market.

The Chinese government also expressed concerns about the country’s rapidly aging population and said it plans to increase the required retirement age. 

Under today’s laws, Chinese men can retire at 60 years old, while women who work in factories can retire as early as 50. Female public-sector workers are permitted to retire at 55. 

Yin said the government would unveil its detailed plan for raising the retirement age in 2017 after making a public consultation next year. The changes will not take effect until five years after the announcement.

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