China says investment managers violating rules may be liable

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Published: July 24, 2015 4:48:53 PM

Investment managers who broke rules while losing money investing on the behalf of Chinese pension funds could be liable for the losses, a spokesman for the Ministry of Human Resources and Social Security said on Friday.

Investment managers who broke rules while losing money investing on the behalf of Chinese pension funds could be liable for the losses, a spokesman for the Ministry of Human Resources and Social Security said on Friday.

The comments, made at a media briefing, followed a rout in Chinese stock markets that began in mid-June, when fears that the central bank was reversing its policy easing cycle fuelled a selloff that at one point lopped as much as a third off share markets.

Li Zhong, the spokesman, did not elaborate on what rules investment managers may have violated.

He also said invesmtment managers may be asked to pay one percent of their annual net income into a reserve fund that will be usede to cover potential damages.

Li did not refer to the stock market meltdown, but said the government had received mixed public feedback about allowing pension funds to invest in riskier assets.

Nearly a third of over 1,000 members of the public who gave their feedback felt that retirement funds should not be invested in risky and volatile assets, he said. In contrast, around 61 percent of respondents supported such investments, Li said, without disclosing the government’s position on the issue.

Faced with a fast-ageing population and a funding shortfall, China’s pension funds are under pressure to improve their returns.

China’s biggest pension fund, the National Social Security Fund, managed about 1.4 trillion yuan as of the end of last year when it earned an investment return of 11.43 percent, almost double that of its returns in 2013.

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