Rules of engagement for funds
Provincial social security funds in China are invested very conservatively and have earned just 2 percent a year over the last 10 years or so. There is a need to boost the returns on these funds in order to finance the defined benefits without increasing contributions. At the end of March, the Guangdong provincial social security bureau decided to let the National Council for Social Security Fund manage around one-third of its funds, 100 billion yuan ($15.86 billion), as the NCSSF has made returns of around 9 percent a year.
The detailed rules of engagement for this experiment have not been publicized, but a number of questions remain unanswered.
Will the assets be ring-fenced and managed as a segregated account, or will they be merged with all the other funds managed by the NCSSF and the overall return credited to the amount allocated by the Guangdong social security bureau?
