Pension fund not responsible for stock market bail-out: official

A move to allow China's pension fund to invest in the stock market is not intended to bail out the market but to create long-term and stable returns, said a vice minister of human resources and social security on Friday.

The change will have a positive effect on China's real economy and support a healthy capital market, but the core purpose is to gain long-term and stable yields for the fund, vice minister You Jun said at a press conference.

The fund's management must prioritize safety, and the timing of the fund's entry into the stock market will be decided by the market, You added.

The State Council finalized guidelines on Sunday allowing the country's pension fund to invest in new products, including the domestic stock market.

The new policy came as China's stock markets continue to decline, beset by shrinking turnover and greater volatility. The key Shanghai index plunged more than 30 percent from its June peak, wiping out most of this year's gains.

Under the new guidelines, up to 30 percent of the pension fund's net assets can be invested in stocks and equities. The fund has assets of around 2 trillion yuan (326.8 billion U.S. dollars) that could be invested, meaning up to 600 billion yuan could theoretically go into the stock markets.

The pension fund has been mainly parked in banks or invested in treasury bonds with low yields, which has long spurred calls for change as China faces the challenge of caring for its growing elderly population. Endi