China's National Social Security Fund will increase investment in private equity funds by more than 50 percent in 2012 as China attempts to improve investment returns from its pension system, the official Shanghai Securities Journal reported on Monday.
The paper quoted NSSF chairman Dai Xianglong, who told a financial forum on Sunday that the NSSF will increase its investment in domestic PE funds to 30 billion yuan ($4.71 billion) by the end of 2012, up from 19.5 billion yuan in 2011, in order to boost returns.
He said he expects investment in PE funds to hit 50 billion yuan by 2015.
Total assets held by the NSSF will reach 1 trillion yuan by year's end, and 1.5 trillion yuan by 2015, he added.
Dai also said that the NSSF will increase investment in state-owned assets, echoing previous statements that the NSSF will increase its support for companies owned by the central government.
The NSSF, which manages the national pension fund on behalf of the central government, already manages pension funds for Beijing and Shanghai, among others, and invests roughly a third of its funds in stocks. It has delivered average annual returns of 9 percent over the last decade.
It is currently allowed to invest 10 percent of its assets into PE and venture capital funds, some of which turn and re-invest in state-owned enterprises through private or public placements.
However, Wang Zhongmin, vice chairman of the NSSF, told state media in March that the NSSF had only invested 2.2 percent of its assets in PE by the end of 2011, leaving significant room for growth.
"While the securities market is volatile, the primary market is full of investment opportunities for us to seek and seize," he said.
China is the world's second-largest economy with a quickly aging population.
Urban residents rely on a pension system that includes a personal account, into which an individual pays 8 percent of salary for at least 15 years, and overall account into which employers pay 20 percent of an employee's salary. ($1 = 6.3705 Chinese yuan)
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