The Chinese government has proposed new rules to allow the country’s CNY1.02trn (€130bn) pension fund to invest more flexibility in capital markets, according to a report by the China Daily newspaper.

It said the government had taken “additional steps to better manage” the fund.

The proposed regulations, which were related to investments in both domestic and overseas capital markets, were opened for public consultation last month, the report said, without providing details. 

The fund – founded and managed by the National Council of the Social Security Fund (NCSSF) in 2000 – has achieved an annual investment return of 7.95%, it said.

The NCSSF is a ministerial-level entity that reports to the State Council.

It was created in 2000 to operate the National Social Security Fund, the country’s biggest pension fund.

The proposed rules also state that the fund should be “appropriately allocated” to fixed income assets, equities and private equity approved by the State Council, the report said.

The draft is seen as the country’s attempt to ensure appropriate investment of the fund through legislative means.

The draft also forbids any institutions or individuals to misappropriate or illegally invest in the fund.

Violators will be subjected to fines, it said.

In a separate report by the Economic Information Daily newspaper, three more Chinese provinces have released plans to merge their urban and rural pension schemes.

Jiangxi, Xinjiang and Henan province join 27 of China’s 31 provincial-level governments in announcing such plans, with some already implementing the policy.

China’s State Council announced in April this year a plan to create a unified pension system for residents in rural and urban areas by 2020.

The pension reform is part of the government’s plan to boost consumption and labour mobility.

At present, China’s pension contributions vary across provinces, and the lack of a central record-keeping system has made worker mobility difficult.

Pensions in lower-income rural areas typically trail the cities.

The northern and eastern provinces of Jilin, Hebei and Anhui have maintained the government-mandated level of CNY55 per month, the report said.

In contrast, residents of Shanghai receive CNY550 a month.

The national average is about CNY90 a month, according to the report.

Nearly half of China’s 1.3bn people live in rural areas.