On November 26, the first pension investment annual report was released. The "Annual Report on the Trusted Operation of the Basic Pension Insurance Fund of the National Council for Social Security Funds" disclosed that in 2017, the investment income of the basic pension insurance fund was 8.783 billion yuan, with an investment return rate of 5.23%.

The entry of pension funds into the market once caused controversy. "You can only make money but not lose money" was the focus of heated public opinion, and it even became a "curse" for pension investment. Under the attention of all parties, pension investment results in 2017 were not bad. However, can such gains be maintained in the future?

The first investment annual report after pension funds entered the market

On August 23, 2015, the State Council issued the "Basic Pension Insurance Fund Investment Management Measures", which clarified that the basic pension insurance fund will be comprehensively promoted Market-oriented, diversified and professional investment operations. Since then, pension funds have officially started the process of investing in the market.

Can you make money? How much money can you make? It has become the focus of heated discussion among all parties in society. Fortunately, judging from this first-ever pension investment annual report, the returns are still very good.

The annual report shows that as of the end of 2017, the Social Security Foundation has signed basic pension insurance funds with nine provinces (autonomous regions and municipalities) in Guangxi, Beijing, Henan, Yunnan, Hubei, Shanghai, Shaanxi, Anhui, and Shanxi. The entrusted investment contract has a total contract amount of 430 billion yuan, and the entrustment period is 5 years. They are all in the contract version with a guaranteed minimum return, and the actual funds received are 273.15 billion yuan.

In 2017, the investment income of the basic pension insurance fund was 8.783 billion yuan, with an investment rate of return of 5.23%. Among them: realized income of 7.642 billion yuan (realized rate of return 4.55%), and change in fair value of trading assets of 1.141 billion yuan.

Since the basic pension insurance fund was entrusted to operate in December 2016, it has accumulated investment income of 8.819 billion yuan (including investment income of 36 million yuan in 2016).

How do pensions make money?

Some media commentators believe that pensions are the people’s retirement money, life-saving money, and life-preserving money. When investing such money, one should be cautious and not careless. Stability and safety are the primary rules and the minimum bottom line for pension investment.

Regarding this point, the "Basic Pension Insurance Fund Investment Management Measures" also sets a "red line" for pension funds to enter the market: the proportion of investment in stocks, stock funds, hybrid funds, and stock-based pension products, The total shall not exceed 30% of the net asset value of the pension fund.

So, how did pension funds make money in 2017?

The National Council of Social Security Fund stated that the Social Security Fund adopts a combination of direct investment and entrusted investment to carry out investment operations. Direct investment is directly managed and operated by the Social Security Foundation, and mainly includes bank deposits and equity investments. Entrusted investments are managed and operated by investment managers entrusted by the Social Security Foundation, and mainly include domestic stocks, bonds, pension products, listed securities investment funds, as well as stock index futures, treasury bond futures, etc.

The report shows that at the end of 2017, the total assets of basic pension insurance funds were 315.519 billion yuan. Among them: direct investment assets were 93.469 billion yuan, accounting for 29.62% of the total assets of basic pension insurance funds; entrusted investment assets were 222.050 billion yuan, accounting for 70.38% of the total assets of basic pension insurance funds.

The National Council of Social Security Fund stated that it has initially established an investment product system. Stock investment pays more attention to safety and stability, and effectively grasps market style opportunities. We will increase monitoring of compliance risks of major investment projects and proactively identify and effectively resolve compliance risks.

In addition, the strategic asset allocation plan and tactical asset allocation plan of the basic pension insurance fund were formulated and implemented. In terms of stock allocation, we strictly control the position opening points and gradually increase investment when the market is low; in terms of fixed income allocation, we accurately grasp the opportunity of high interest rates and increase allocation efforts, laying the foundation for achieving stable and better returns throughout the year.

The word "stability" is at the forefront, and the entry of pension funds into the market is worth looking forward to

The entry of pension funds into the market is still a new thing for China. The annual report released this time has played a "reassurance" role to a certain extent.

During the National Two Sessions this year, some members and experts suggested that the pension insurance system should be improved, tax incentives should be increased, and long-term funds should be encouraged to enter the capital market.

Zheng Bingwen, a member of the National Committee of the Chinese People's Political Consultative Conference and director of the World Social Security Research Center of the Chinese Academy of Social Sciences, believes that pension funds entering the market as long-term funds can not only become a "stabilizer" for the capital market, but can also obtain relatively better results through long-term investment. Investment returns, thereby achieving a win-win situation between pension preservation and appreciation and capital market stability.

After the annual report was released, the relevant person in charge of the National Council for Social Security Fund publicly explained the current investment strategy of the basic pension insurance fund to the media, saying that the Social Security Fund adheres to the principles of long-term investment, value investment and responsible investment. Concept, investment operations and management are carried out in accordance with the principles of prudent investment, safety first, controlling risks and increasing returns to ensure the safety of funds and achieve value preservation and appreciation.

At the same time, the person in charge also introduced that the Social Security Foundation is actively promoting the construction of internal control systems.

An internal control committee was established to solidly promote the construction of a three-dimensional internal control system of organizational structure, control methods and business chains. We have researched and formulated normative documents such as basic internal control systems and basic business systems, researched and established an internal control execution system, and improved internal control risk reporting, evaluation, inspection and accountability mechanisms. Carry out internal control inspections and internal audits to promptly discover hidden risks and problems, effectively plug loopholes and prevent risks.

It is foreseeable that pension investment, with the emphasis on "stability", will play an increasingly important role in the future.