China's aging population is on the rise. (Photo : Getty Images)
There will be 360 billion yuan in pension that will be diversified by the Ministry of Human Resources and Social Security.
Ye Weimin, head of China's Ministry of Human Resources and Social Security, said that the total investment is 2.84 trillion yuan and 2.58 trillion yuan last year. There is still a surplus of 3.67 trillion yuan.
The Chinese government would like to make use of the surplus fund in the hopes of strengthening the capacity of the ministry to give bigger pension to its senior citizenry.
The ministry is considering to invest the fund in the stock market but is not yet confirmed. There were already various banks and financial institutions selected to manage the fund.
He said, "We're aware that the money is crucial for Chinese citizens. Thus, government policies have been in place to ensure high earnings of the investment."
"Wealthy provinces are capable of ensuring payment of as long as 50 months. Whereas impoverished ones are seeing a deficit," he added.
The ministry's head said that the government wants to make China's national pension fund bigger because the senior citizen population of the country is increasing. The population is seen to be at 300 million citizens over 60 years by 2025.
The legal retiring age will be put to 65 years from 55 years to extend the population's working lifespan. The country is facing a shortage of able workers due to the big gap between the old and young generation.
The gap is an effect of the one-child policy that was enforced for decades. The policy was scrapped last year and shifted to the two child policy.
Hao Hong, chief China strategist at Bocom International Holdings Co., said that the fund is strong and that the pension fund will have a very good effect on the economy.
He said, "The National Council for Social Security Fund has such a good reputation in being a value investor that if they take the lead, the signaling effect is actually quite strong. It's almost like Warren Buffett saying he is buying a stock."
