The annual total returns on basic pension fund investments reached CNY8.78bn ($1.2bn) last year, with an annual return rate of 5.23%, according to data released by the National Council for Social Security Fund (NCSSF) in its annual report.
This is the first time that the NCSSF published its annual yield since local governments in the country began entrusting the fund in December 2016 with parts of their vast pool of pension assets for higher yields, according to a report carried by Xinhua New Agency.
"The return was nearly two percentage points higher than the risk-free interest rate in the capital market within the same period and reflects the advantage of pooled investments in the form of funds," Guan Bo, a researcher with a government-run institute, said.
NCSSF data also showed the basic pension fund had total assets worth CNY315.52bn at the end of last year, while outstanding liabilities stood at CNY33.62bn.
By the end of 2017, the NCSSF had signed investment contracts with nine provincial regions, namely Guangxi, Beijing, Henan, Yunnan, Hubei, Shanghai, Shaanxi, Anhui and Shanxi. The total funds entrusted for investment by the NCSSF by these local governments stood at CNY430bn. The goal was to achieve higher return for basic pension funds managed by local governments as the NCSSF is allowed to invest in more areas such as the stock market.
Investment of basic pension funds by loca governments are restricted to bank deposits or treasury bills, with annual yields of up to 2-3% only.
The NCSSF report's release was timely, as three years have passed since the State Council issued a directive allowing local governments to transfer basic pension funds to the NCSSF for investment including in the stock market. There has been much public discussion as to whether investing pension money in the stock market is profitable or otherwise.