China may shift shares to fund pensions

--Beijing is considering transferring shares from state-owned companies to the national pension fund to help fill a gaping shortfall, the fund’s new head told the Financial Times on Friday. --Dai Xianglong, chairman of the National Council for Social Security Fund, said the government, individuals and companies all had to increase contributions if the $70bn fund was to meet the pension commitments to the country’s ageing workforce. --“In the future it is possible for a portion of domestic public state-owned shares to be transferred to the NCSSF,” said Mr Dai, a former central bank governor, in an interview. --Internal government estimates put the NCSSF’s shortfall at close to $350bn and the funding gap is expected to worsen as the population ages. The government is looking at relaxing the one-child policy to address the problem of a progressively small workforce. --The NCSSF is the largest institutional investor in Hong Kong stocks because of a policy that grants it 10 per cent of all initial public offerings by Chinese state-owned enterprises in that market. --For years the fund has lobbied to have the policy extended to companies listing in Shanghai and Shenzhen. --The appointment of a politician as senior as Mr Dai, who most recently served as mayor of the port city of Tianjin, is seen as a boost to the fund's clout in the bureaucracy. --The fund receives money directly from central government, sales of lottery tickets, its share of Hong Kong IPOs and returns on investments. --Mr Dai did not say whether the NCSSF would get a portion of the shares of listed state companies or only those that carry out IPOs in the future. He did not address the issue of opposition to the plan from state-owned enterprises or other interests. --The transfer of shares to the NCSSF from parent companies of listed firms would act as a stabilising force in the domestic stock market at a time when the lock-up on huge volumes of state-owned shares is expiring and share prices have fallen 30 per cent from highs reached in October last year.