Ministry of Finance: The maximum investment ratio of the social security fund in stock and equity assets can reach 40% and 30% respectively

On December 6, the Ministry of Finance issued a letter on soliciting opinions from the public on the "Measures for the Administration of Domestic Investment of the National Social Security Fund (Draft for Comments)".

It is mentioned that the social security fund to carry out direct equity investment and private equity fund investment, to adhere to the principle of safety first, the best of the best, prudent selection of investment projects and equity fund managers, scientific demonstration of investment value, comprehensive research and judgment to prevent risks, strict implementation of investment decision-making committee review and internal control and other related systems, to ensure the safety of the fund and value preservation and appreciation.

It is mentioned that according to the practice of fund investment and supervision, taking into account the characteristics of risk and return, the investment varieties of the national social security fund will be divided according to deposit and interest rate, credit fixed income, stock and equity, and the full caliber of domestic and overseas investment will be included in the regulatory ratio. At present, the maximum investment ratio of stock and equity assets can reach 40% and 30% respectively, which further improves the investment flexibility of the national social security fund and is conducive to continuing to support the development of the capital market.

There are a total of 11 types of products and tools in the "Administrative Measures", and the main adjustments include: First, they are included in the special approvals of previous years, including interbank certificates of deposit, policy and development bank bonds, local government bonds, enterprise bonds, bond repurchases, direct equity investment, industrial funds, market-oriented equity investment funds, preferred shares, asset securitization products, and publicly offered infrastructure securities investment funds. The second is to increase and adjust the investment scope of the national social security fund in combination with the development and changes of the financial market, with reference to the investment of the basic pension insurance fund and the enterprise annuity fund, including corporate bonds, debt financing tools for non-financial enterprises, pension products, etc. Third, according to the development of the financial market, we should appropriately increase hedging tools, including stock index futures, treasury bond futures, stock index options, etc. In addition, it is clarified that the scope of direct investment of the Social Security Fund is limited to bank deposits, interbank certificates of deposit, qualified direct equity investment, industrial funds, equity investment funds (including venture capital funds), preferred shares, approved stock index investment, and exchange-traded open-ended index funds.

Measures for the Administration of Domestic Investment of the National Social Security Fund

(Draft for Solicitation of Comments)

Chapter I: General Provisions

Article 1 These measures are formulated in accordance with the Social Insurance Law of the People's Republic of China, the Regulations on the National Social Security Fund and other laws and regulations in order to regulate the domestic investment and operation of the National Social Security Fund.

Article 2 The term "National Social Security Fund" (hereinafter referred to as the National Social Security Fund) refers to the National Social Security Fund Council (hereinafter referred to as the Social Security Fund) is responsible for the management and operation of the National Social Security Strategic Reserve Fund.

Article 3 The investment and operation of the national social security fund shall adhere to the leadership of the Communist Party of China, adhere to the principles of safety, profitability and long-termness, and achieve value preservation and appreciation under the premise of ensuring safety.

Fourth Ministry of Finance, the Ministry of Human Resources and Social Security is responsible for the development of the national social security fund management and operation of the relevant policies, the national social security fund investment and operation supervision.

The securities regulatory authority of the State Council, the banking and insurance regulatory authority of the State Council and other financial regulatory agencies shall supervise the business activities of the investment managers and custodians of the national social security fund in accordance with their respective powers.

Chapter II Management and Investment Operations

Article 5 The Social Security Foundation shall, in accordance with the provisions of laws and regulations and these Measures, manage and operate the National Social Security Fund, in accordance with the functional positioning of the investment operation agency, assume the main responsibility for the safety and preservation and appreciation of the fund, and make independent investment decisions and carry out investment operations within the scope of investment approved by the State Council and its proportion.

Article 6 The Social Security Foundation shall prudently and prudently manage and operate the National Social Security Fund, scientifically formulate relevant systems for investment and operation, and report to the Ministry of Finance and the Ministry of Human Resources and Social Security for the record.

Article 7 The Social Security Foundation shall establish and improve the investment decision-making mechanism, optimize the investment decision-making process, study and formulate a scientific and stable asset allocation plan and investment strategy, and organize its implementation.

Major policies and strategies for fund management and operation, fund strategic asset allocation plan, annual asset allocation plan and other major matters shall be submitted to the general meeting of the board of directors for examination and approval, and shall be reported to the Ministry of Finance and the Ministry of Human Resources and Social Security for the record.

Article 8 The Social Security Foundation shall establish and improve the risk management system and internal control system, and run risk management throughout the whole process of investment and operation, and the risk management and internal control measures shall be reported to the Ministry of Finance and the Ministry of Human Resources and Social Security for the record.

Article 9 The Social Security Foundation may take direct investment, entrusted investment or other ways approved by the State Council to carry out investment and operation.

Article 10 The social security fund directly invests in the operation of the national social security fund, and shall strengthen the whole process of research and demonstration, investment decision-making, post-investment management and investment exit. Establish and improve the project investment operation process, improve the project investment risk prevention and control mechanism and performance evaluation and evaluation system.

To carry out direct equity investment and private equity fund investment, the social security fund should adhere to the principle of safety first, select the best of the best, prudently select investment projects and equity fund managers, scientifically demonstrate the investment value, comprehensively study and judge the prevention of risks, and strictly implement the relevant systems such as investment decision-making committee deliberation and internal control to ensure the safety and value preservation and appreciation of the fund.

11th social security fund to invest in the operation of the national social security fund, should improve and improve the entrusted investment management mechanism and methods, the establishment of an effective national social security fund investment manager (hereinafter referred to as the investment manager), the national social security fund trustee (hereinafter referred to as the custodian) selection, supervision and evaluation, replacement and retirement system.

The Social Security Fund shall improve and improve the effective identification, measurement, assessment, monitoring and response mechanism and corresponding information management system for the risk of the entrusted asset portfolio.

The Social Security Foundation shall sign a contract with the investment manager and custodian to stipulate the rights and obligations of both parties, and report to the Ministry of Finance, the Ministry of Human Resources and Social Security and the financial regulatory authorities for the record.

Article 12 The investment manager and the custodian shall be independent of each other in terms of personnel, finance and assets, and their senior management personnel shall not concurrently hold any position in the other.

Chapter III Investment Scope and Proportion

Article 13 The National Social Security Fund may invest in the following domestic products and instruments:

(1) Bank deposits and interbank certificates of deposit;

(2) Treasury bonds, policy and development bank bonds, local government bonds, railway bonds and remittance bonds issued by China State Railway Group Co., Ltd.;

(3) Enterprise (corporate) bonds, financial bonds, debt financing instruments of non-financial enterprises, and bond repurchases with a credit rating of investment or above;

(4) Stocks (including CDRs);

(5) Qualified direct equity investment (including central enterprises and their subsidiaries, as well as local industry leading enterprises with core competitiveness, including high-quality private enterprises);

(6) Industrial funds approved by the State Council or its authorized agencies and equity investment funds (including venture capital funds) filed with the securities regulatory authority of the State Council;

(7) Preferred shares (including preferred shares of listed companies and preferred shares of non-listed companies that meet the scope of investment);

(8) Asset securitization products with a credit rating of investment or above (including credit asset-backed securities, asset-backed notes, and asset-backed securities listed on stock exchanges);

(9) Publicly offered securities investment funds (including money market funds, bond securities investment funds, hybrid securities investment funds, equity securities investment funds, and publicly offered infrastructure securities investment funds);

(10) Hedging instruments such as stock index futures, treasury bond futures, and stock index options;

(11) Pension products (including monetary pension products, fixed-income pension products, mixed pension products, and stock-based pension products).

When investing in and operating the above-mentioned products and tools listed in the preceding paragraph, the Social Security Fund and its investment managers shall comply with the relevant industry regulatory requirements.

The investment scope of the National Social Security Fund directly invested and operated by the Social Security Fund is limited to bank deposits, interbank certificates of deposit, qualified direct equity investment, industrial funds, equity investment funds (including venture capital funds), preferred shares, approved stock index investment, exchange-traded open-ended index funds and other products or instruments approved by the State Council.

Article 14 The proportion of investment in various types of products and instruments at home and abroad shall be calculated at cost and shall comply with the following provisions:

(1) Bank deposits, interbank certificates of deposit, treasury bonds, policy and development bank bonds, local government bonds, government bond repurchase, railway bonds issued by China State Railway Group Co., Ltd., and Huijin bonds shall not be less than 40%; of which, the proportion of bank deposits shall not be less than 10%, and the deposits in a bank shall not be higher than 25% of the total bank deposits of the National Social Security Fund;

(2) Enterprise (corporate) bonds, financial bonds, debt financing instruments of non-financial enterprises, money market funds, bond-type securities investment funds, monetary pension products, fixed-income pension products, and asset securitization products with a credit rating of above the investment level shall not be higher than 20% in total;

The balance of funds for bond repurchase shall not be higher than 40% of the net asset value of the national social security fund on each trading day;

(3) Stocks, equity-based securities investment funds, hybrid securities investment funds, equity-based pension products, hybrid pension products, publicly offered infrastructure securities investment funds, preferred shares of listed companies, and Chinese depositary receipts, the total shall not be higher than 40%;

(4) The total amount of direct equity investment and preferred shares of non-listed companies shall not be higher than 20%, the total number of industrial funds and equity investment funds (including venture capital funds) shall not be higher than 10%, and the total number of preferred shares of listed companies and the preferred shares of non-listed companies shall not be higher than 5%.

Article 15 According to the cost calculation, a single investment manager to manage the assets of the national social security fund invested in the securities issued by a single enterprise, a single securities investment fund, shall not exceed 10% of the securities issued by the enterprise or the share of the fund, shall not exceed 10% of the total value of the assets of the national social security fund under its management; a single portfolio invested in the securities issued by a single enterprise, a single securities investment fund, shall not exceed 5% of the securities issued by the enterprise or the share of the fund.

The investment of the assets of the National Social Security Fund managed by the investment manager in the fund managed by itself must be approved by the Social Security Fund.

16th entrusted to a single investment manager for the management of assets, calculated at cost shall not exceed 15% of the total value of the annual national social security fund entrusted assets.

Article 17 The Social Security Foundation shall effectively prevent concentration risks. According to the cost calculation, the national social security fund investment in a single equity project is not higher than 30% of the total scale of the investment target, and the investment in a single asset securitization product and preferred shares is not higher than 20% of the total scale of the investment target.

Article 18 The National Social Security Fund's participation in stock index futures, treasury bond futures and stock index options trading can only be for the purpose of hedging, and shall be implemented in accordance with the relevant provisions of the hedging management of the China Financial Futures Exchange.

19th according to the national social security fund investment and operation needs and changes in the financial market, the Ministry of Finance, the Ministry of human resources and social security in consultation with the relevant departments in a timely manner to report to the State Council on the national social security fund investment scope and proportion of adjustments.

Chapter IV Investment Managers

Article 20 The term "investment manager" in these measures refers to a professional institution entrusted by the Social Security Foundation to operate and manage the National Social Security Fund in accordance with the investment management contract. Investment managers should have good asset management performance, financial status and social reputation, establish a sound internal governance structure, and improve internal control mechanisms and risk management systems.

Article 21 The investment manager shall be determined by the Social Security Foundation. To apply for the investment management business of the National Social Security Fund, an application form must be submitted to the Social Security Foundation. The Social Security Foundation has set up an expert review committee with a sufficient number of independent persons to review the qualified applicants for the investment management business of the National Social Security Fund with reference to the government procurement management system. The review committee voted to propose a list of recommended investment managers of the National Social Security Fund and submitted it to the Social Security Fund for confirmation. The selection and employment methods shall be formulated by the Social Security Foundation. The selection and employment methods and results shall be reported to the Ministry of Finance, the Ministry of Human Resources and Social Security and relevant financial regulatory agencies for the record.

Article 22 The investment manager of the National Social Security Fund shall meet the following conditions:

(1) An independent legal person registered in China, established with the approval of the financial regulatory authority, and qualified for fund management and asset management;

(2) The paid-in capital shall not be less than RMB 100 million, and the net assets shall not be less than RMB 500 million;

(3) Have more than 5 years of experience in securities investment management business in China, and have prudent management, standardized operation and high reputation;

(4) It has a sound corporate governance structure, risk management system and internal control mechanism, and has not committed major violations of laws and regulations in the past three years, and has not been subject to major penalties by financial regulators.

Article 23 The investment manager shall perform the following duties:

(1) Uphold the principle of prudence, honesty, creditworthiness, diligence and responsibility for the investment, operation and management of entrusted assets;

(B) in accordance with the provisions of the National Social Security Fund investment management risk reserves;

(3) Report the relevant situation to the Social Security Foundation;

(4) Accept the supervision and inspection of the Social Security Foundation;

(5) Accept the supervision of the custodian in accordance with the provisions of laws, administrative regulations and investment management contracts;

(6) In accordance with the relevant provisions of the investment management contract, keep the archives related to the entrusted assets for more than 15 years;

(7) Other duties stipulated in laws, administrative regulations, departmental rules, and investment management contracts.

Article 24 In any of the following circumstances, the investment manager shall report to the Social Security Fund in a timely manner:

(A) the national social security fund asset market value fluctuations;

(2) The investment manager reduces its capital, merges, separates, dissolves, is revoked in accordance with law, decides to apply for bankruptcy or is filed for bankruptcy, or is taken over by a decision;

(3) The investment manager is involved in major litigation or arbitration;

(4) Major changes in the directors, supervisors, general managers or other senior management of the investment manager;

(5) The investment manager has incurred major operational risks;

(F) may make the management and value of the assets entrusted by the National Social Security Fund have a significant impact on other matters;

(7) Other reporting matters agreed upon in the investment management contract.

Article 25 In any of the following circumstances, the investment manager shall retire:

(1) dissolved, revoked in accordance with law, bankrupt or taken over by a receiver;

(2) The Social Security Fund has sufficient reasons to believe that the replacement of investment managers is in the interests of the National Social Security Fund;

(3) The custodian has sufficient reasons to believe that the change of investment manager is in the interests of the National Social Security Fund and obtains the consent of the Social Security Fund;

(4) The Ministry of Finance, the Ministry of Human Resources and Social Security or the financial regulatory authority have sufficient grounds to believe that the investment manager cannot continue to perform the entrusted asset management duties;

(5) Other circumstances in violation of these Measures or the provisions of the investment management contract.

Article 26 When the investment manager is replaced or retired, the Social Security Fund shall appoint a new investment manager as soon as possible and report to the Ministry of Finance, the Ministry of Human Resources and Social Security and the financial regulatory authorities for the record;

Article 27 Investment managers shall not engage in the following activities:

(A) the national social security fund assets mixed with other assets investment;

(B) the disclosure of the national social security fund obtained by the convenience of the job is not public information, the use of the information to engage in or express, implicit or implicit others to engage in related trading activities;

(C) unfair treatment of the assets of the national social security fund account;

(D) misappropriation, embezzlement of the national social security fund entrusted assets;

(E) to engage in investments that may make the entrusted assets of the National Social Security Fund bear unlimited liability;

(6) Other activities that must not be engaged in as stipulated in laws, administrative regulations, departmental rules, or investment management contracts.

Chapter V: Custodians

Article 28 The custodian referred to in these measures refers to the commercial banks and other professional institutions entrusted by the Social Security Foundation to safely keep the assets of the National Social Security Fund in accordance with the contract. The custodian shall have good fund custody performance and social reputation, establish a good internal governance structure, and improve the internal control mechanism and risk management system.

Article 29 The custodian shall be determined by the Social Security Foundation. The Social Security Foundation formulates selection and employment methods, and evaluates and selects custodians in accordance with the principles of openness, fairness and impartiality. The selection and employment methods and results shall be reported to the Ministry of Finance, the Ministry of Human Resources and Social Security and relevant financial regulatory agencies for the record.

Article 30 The custodian shall meet the following conditions:

(1) Have professional custody capabilities, and be equipped with sufficient full-time personnel familiar with custody operations;

(2) The paid-in capital shall not be less than 8 billion yuan;

(3) Have a sound corporate governance structure, risk management system and internal control mechanism, have no major violations of laws and regulations in the past three years, and have not been subject to major penalties from relevant regulatory departments;

(4) Possess safe and efficient clearing and delivery capabilities;

(5) Have good information technology service and support capabilities.

Article 31 The custodian shall perform the following duties:

(1) Perform the obligations of the custodian in accordance with the principles of good faith, diligence and responsibility, and safely custody assets;

(B) the implementation of the instructions of the Social Security Foundation;

(3) Implement the investment instructions of the investment manager, and be responsible for the settlement of funds under the name of the National Social Security Fund;

(4) Supervise the investment manager in accordance with the provisions of relevant laws and administrative regulations, the provisions of the custody contract and the relevant requirements of the Social Security Foundation;

(E) in accordance with the relevant provisions, supervise the investment manager to regularly and fully withdraw the national social security fund investment management risk reserve and in accordance with the provisions of the management, use and investment;

(6) Keeping the accounting vouchers, account books, statements and other business archives related to the custodian assets in complete accordance with the custody contract for more than 15 years;

(7) Other duties provided for by laws, administrative regulations, departmental rules, and trusteeship contracts.

Article 32: In any of the following circumstances, the custodian shall retire:

(1) dissolved, revoked in accordance with law, bankrupt or taken over by a receiver;

(2) The Social Security Foundation has sufficient reasons to believe that the custodian should retire;

(C) the Ministry of Finance, the Ministry of Human Resources and Social Security or financial regulators have sufficient reasons to believe that the custodian can not continue to perform the duties of the National Social Security Fund;

(4) Other circumstances in violation of these Measures or the custody contract.

Article 33 When the custodian is replaced or retired, the Social Security Foundation shall appoint a new custodian as soon as possible and report to the Ministry of Finance, the Ministry of Human Resources and Social Security and the financial regulatory authorities for the record;

Article 34: Custodians shall not engage in the following activities:

(A) the national social security fund assets are confused with other asset management;

(B) the disclosure of the national social security fund obtained by the convenience of the job is not public information, the use of the information to engage in or express, implicit or implicit others to engage in related trading activities;

(C) unfair treatment of the assets of the national social security fund account;

(D) misappropriation, embezzlement of the national social security fund custody assets;

(5) Other activities that laws, administrative regulations, departmental rules, and trusteeship contracts provide must not be engaged in.

Chapter VI Distribution of Investment Income and Expenses

Article 35 The net income of the National Social Security Fund shall be fully incorporated into the National Social Security Fund, and shall be allocated and invested in accordance with the relevant provisions of the State.

Article 36 The Social Security Foundation shall reasonably set the structure and level of entrusted asset management fees and custody fees according to the types of investment products and their risk-return characteristics. At the same time, with reference to the prevailing market standards, performance incentives for investment managers may be stipulated in the investment management contract, and the specific plans shall be approved by the Ministry of Finance and the Ministry of Human Resources and Social Security.

Article 37 The management fee of the entrusted assets of the National Social Security Fund consists of the basic management fee and the floating management fee. The social security fund should set a tiered basic management fee rate according to the scale of entrusted assets, and implement a floating management fee rate according to investment performance, rewarding the good and punishing the bad. In a single investment management contract, the annual fee of the management fee of equity products shall not be higher than 0.8% of the net asset value of the entrustment, of which the basic management fee shall not be higher than 0.5%, the annual fee of the management fee of bond products shall not be higher than 0.3% of the net asset value of the entrustment, and the annual fee of the management fee of currency and cash products shall not be higher than 0.1% of the net asset value of the entrustment.

The annual management fee for investing in equity investment funds shall not be higher than 1.5% of the investment amount.

Article 38 The annual fee of the custodian shall not be higher than 0.05% of the net asset value of the national social security fund entrusted to the custodian.

Article 39 The investment manager shall draw 20% of the management fee collected in the current year from the investment management risk reserve of the National Social Security Fund, which shall be specially used to make up for the loss of entrusted investment. When the balance of the investment management risk reserve reaches 10% of the net asset value entrusted by the national social security fund, it can no longer be withdrawn.

Chapter VII Accounts and Financial Management

Article 40 The Social Security Foundation shall strengthen the management of the bank accounts of the National Social Security Fund, prudently and reasonably allocate bank deposits, establish and improve the relevant internal management system, and improve the dynamic risk prevention and control mechanism.

41st investment manager entrusted with the management of the national social security fund asset management business should be separated from the manager's other business in finance, accounts, shall not be mixed operations and accounting.

Article 42 The custodian shall open an independent securities account and capital account for the National Social Security Fund.

Article 43 The National Social Security Fund and the Social Security Foundation shall establish separate accounts and separate accounts.

Article 44 The investment manager and the custodian shall conscientiously carry out daily accounting, prepare accounting statements in strict accordance with the relevant regulations, and regularly check the accounting, valuation and accounting statements of the entrusted and custodian assets of the National Social Security Fund.

Chapter VIII Reporting System

Article 45 The Social Security Foundation, investment managers, custodians and other institutions involved in the investment and operation of the National Social Security Fund shall, in accordance with the relevant provisions, report on the investment and operation of the National Social Security Fund, ensure that there are no false records, misleading statements or major omissions in the content of the report, and be responsible for the authenticity and completeness of the content of the report.

Article 46 The information disclosure and reporting of the Social Security Foundation shall meet the following requirements:

(A) once a year to the public to announce the national social security fund assets and income and other financial status, and accept social supervision;

(B) once a quarter to the Ministry of Finance, the Ministry of Human Resources and Social Security to submit the national social security fund financial accounting report, investment management report;

(3) Once a month, submit a monthly report on the investment and operation of the national social security fund to the Ministry of Finance and the Ministry of Human Resources and Social Security;

(D) a single national social security fund investment management contract expires, to the Ministry of Finance, the Ministry of human resources and social security submitted by the audit of the accounting firm report, the national social security fund entrusted assets investment description;

(E) the national social security fund major events, immediately reported to the Ministry of Finance, the Ministry of Human Resources and Social Security, and the preparation of an interim report, approved after the announcement.

Article 47 The investment manager shall, in accordance with the requirements of the investment management contract and the Social Security Foundation, provide the Social Security Foundation with a report on the investment and operation of the entrusted assets of the National Social Security Fund on a regular and irregular basis.

Article 48 The custodian shall, in accordance with the requirements of the trusteeship contract and the Social Security Foundation, provide the National Social Security Fund with a report on the custodian assets of the National Social Security Fund on a regular and irregular basis, and review the relevant content of the report prepared by the investment manager in Article 47.

Chapter IX: Legal Responsibility

Article 49 Where an investment manager or custodian violates the independence provisions of Article 12 of these Measures, it shall be ordered to make corrections within a time limit and shall be fined not less than 100,000 yuan but not more than 1,000,000 yuan.

Article 50 Where an investment manager violates the provisions of Article 13 of these Measures by making investments beyond the scope, it shall be ordered to make corrections within a specified period of time and shall be fined not less than 100,000 yuan but not more than 1,000,000 yuan.

Article 51 Where an investment manager violates the provisions of Article 15 of these Measures, it shall be ordered to make corrections within a time limit and shall be fined not less than 100,000 yuan but not more than 1,000,000 yuan.

Article 52 If an investment manager violates the provisions of Article 24 of these Measures by failing to report to the Social Security Fund in a timely manner or failing to report to the Social Security Fund any of the circumstances listed in this article, it shall be ordered to make corrections within a time limit and shall be fined not less than 100,000 yuan but not more than 1 million yuan.

Article 53 Where an investment manager or custodian violates the provisions of Articles 27 and 34 of these Measures, it shall be ordered to make corrections within a set period of time, confiscate the unlawful gains, and impose a fine of not less than 1 time but not more than 5 times the amount of the unlawful gains;

Article 54 Where an investment manager violates the provisions of Article 47 of these Measures, and the custodian violates the provisions of Article 48 of these Measures, it shall be ordered to make corrections within a time limit and imposed a fine of not less than 100,000 yuan but not more than 1,000,000 yuan.

Article 55 If an investment manager or custodian engages in malpractice, operates in violation of regulations, does not perform its entrusted asset management or custody duties, or is seriously derelict in its duties, resulting in major losses to the National Social Security Fund, in addition to imposing a fine of the corresponding amount in accordance with law, it shall also be replaced or retired in accordance with the provisions of these measures and the contract.

Article 56 The securities regulatory authority of the State Council and the banking regulatory institution of the State Council shall make a decision on the punishment provided for in Articles 49 to 55 of these Measures in accordance with their respective powers;

Article 57 If the Social Security Foundation violates the provisions of these Measures, the Ministry of Finance and the Ministry of Human Resources and Social Security shall order it to make corrections. Penalties for violations of laws and regulations shall be carried out in accordance with relevant national laws and regulations.

Chapter X: Supplementary Provisions

Article 58 These Measures shall come into force on X/X/X/X, and the "Interim Measures for the Investment Management of the National Social Security Fund" shall be repealed at the same time.

About the National Social Security Fund Domestic Investment Management

Measures (Draft for Comments).

In order to implement the decision-making and deployment of the 20th National Congress of the Communist Party of China on "improving the value preservation and appreciation of social security funds and the safety supervision system", in accordance with the "Social Insurance Law of the People's Republic of China", "Regulations on the National Social Security Fund" and other laws and regulations, we revised and drafted the "Measures for the Administration of Domestic Investment of the National Social Security Fund (Draft for Comments)" (hereinafter referred to as the "Administrative Measures") to further improve the laws and regulations of the national social security fund, standardize investment behavior, and support the national social security fund to better maintain and increase its value.

1. Drafting background

In August 2000, the CPC Central Committee and the State Council decided to establish the National Social Security Fund (hereinafter referred to as the National Social Security Fund). In December 2001, with the approval of the State Council, the Ministry of Finance and the former Ministry of Labor and Social Security promulgated and implemented the Interim Measures for the Investment Management of the National Social Security Fund (Decree No. 12 of the Ministry of Finance and the Ministry of Labor and Social Security, hereinafter referred to as the "Interim Measures"). Since then, the mainland's capital market has continued to grow and develop, the legal environment has been continuously improved, and the variety of investment has become increasingly rich. Since 2002, with the consent of the State Council, the Ministry of Finance and the Ministry of Human Resources and Social Security have made adjustments to the types and proportion of fund investment, appropriately broadened the scope of fund investment, and put forward clear requirements for the prevention and control of investment risks. In May 2006, the Interim Provisions on the Administration of Overseas Investment of the National Social Security Fund (Cai Jin [2006] No. 24, hereinafter referred to as the "Interim Provisions on Overseas Investment") came into effect, allowing the National Social Security Fund to carry out overseas entrusted investment. In May 2016, the Regulations on the National Social Security Fund (Decree No. 667 of the State Council of the People's Republic of China, hereinafter referred to as the "Regulations") came into force, clarifying the positioning and management system of the fund from a higher legislative level.

Since its establishment, the scale of the national social security fund has been growing, the investment capacity has been continuously enhanced, the breadth and depth of asset allocation has been continuously improved, and the average annual investment rate of return is 7.66%. However, it should also be noted that the "Interim Measures" have been implemented for more than 20 years, and some of them are based on the characteristics of the early stage of the establishment of the National Social Security Fund, which can no longer fully adapt to the current development of the financial market and the investment management situation of the National Social Security Fund. At the same time, the number of special approvals in the past was large and the time span was long, so it was also necessary to conduct a systematic and comprehensive combing.

The 20th National Congress of the Communist Party of China proposed to "improve the value preservation and appreciation of social security funds and the safety supervision system", which pointed out the direction for the revision of the "Interim Measures". In order to thoroughly implement the spirit of the 20th National Congress of the Communist Party of China, we will work with the Ministry of Human Resources and Social Security to actively study and revise the Interim Measures based on the investment and operation practices and long-term development goals of the National Social Security Fund, and form the Measures for the Administration of Domestic Investment of the National Social Security Fund (Draft for Comments) (hereinafter referred to as the "Administrative Measures").

2. Revision process

Up to now, the drafting of the Administrative Measures has mainly gone through the following stages:

(1) Forming a first draft. In August 2022, we launched the revision of the Interim Measures, sorted out the current investment management regulations of the National Social Security Fund, studied the revision ideas, and drafted the first draft of the Administrative Measures.

(2) Discussion and solicitation of opinions. In September 2022, we organized a communication and coordination meeting between relevant departments and the Social Security Foundation, and fully listened to the opinions and suggestions of all parties. At the same time, the opinions of the People's Bank of China, the former China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and relevant units within the Ministry were solicited on the first draft of the Administrative Measures.

(3) Form a draft for solicitation of comments. Since March 2023, according to the opinions of various departments and relevant units within the ministry, we have held several meetings with the Ministry of Human Resources and Social Security and the Social Security Foundation to revise and improve the first draft of the "Management Measures" and form a draft for comments.

Third, the main content

The "Administrative Measures" consists of 10 chapters and 58 articles, the main contents of which include:

Chapter I is the General Provisions. It clarifies the basis for formulation, the scope of applicable objects, the principles of investment and operation, and the guidance and supervision departments.

Chapter 2 is management and investment operations. It mainly explains the responsibility positioning, investment decision-making mechanism and investment operation system of the social security foundation.

Chapter 3 deals with the scope and proportion of investment. It mainly lists the scope, proportion, concentration and other contents of the investable products and tools of the national social security fund.

Chapter 4 is for investment managers. It mainly stipulates the selection and appointment process, conditions and performance of duties of investment managers.

Chapter 5 is the Custodian. It mainly stipulates the selection and employment process, the conditions that should be met, and the performance of duties.

Chapter 6 deals with the allocation of investment income and expenses. It mainly stipulates the structure and level of entrusted asset management fees and custody fees, as well as the withdrawal of risk reserves.

Chapter VII deals with accounts and financial management. It mainly stipulates the independence of asset management of national social security fund managers and custodians.

Chapter VIII is the reporting system. It mainly stipulates the information disclosure and reporting of the social security foundation, and the reporting of managers and custodians.

Chapter 9 is legal liability. It mainly stipulates the punishment standards for relevant violations of laws and regulations.

Chapter 10 is the Supplementary Provisions.

Fourth, several matters that need to be explained

(1) On legislative positioning. The "Administrative Measures" are mainly aimed at the domestic investment of the National Social Security Fund, and the management of overseas investment will be improved through the revision of the "Overseas Interim Provisions".

(2) On the scope of investment. The previous special approvals will be integrated, and the investment scope will be appropriately optimized and adjusted, taking into account the needs of fund security and value preservation and appreciation. There are a total of 11 types of products and tools in the "Administrative Measures", and the main adjustments include: First, they are included in the special approvals of previous years, including interbank certificates of deposit, policy and development bank bonds, local government bonds, enterprise bonds, bond repurchases, direct equity investment, industrial funds, market-oriented equity investment funds, preferred shares, asset securitization products, and publicly offered infrastructure securities investment funds. The second is to increase and adjust the investment scope of the national social security fund in combination with the development and changes of the financial market, with reference to the investment of the basic pension insurance fund and the enterprise annuity fund, including corporate bonds, debt financing tools for non-financial enterprises, pension products, etc. Third, according to the development of the financial market, we should appropriately increase hedging tools, including stock index futures, treasury bond futures, stock index options, etc. In addition, it is clarified that the scope of direct investment of the Social Security Fund is limited to bank deposits, interbank certificates of deposit, qualified direct equity investment, industrial funds, equity investment funds (including venture capital funds), preferred shares, approved stock index investment, and exchange-traded open-ended index funds.

(3) About the management fee. Considering that the scale of the national social security fund is large and the scale effect of investment has been formed, in order to further promote the preservation and appreciation of the value of the national social security fund, consider referring to the basic pension insurance fund investment supervision measures and practices, combined with the direction of relevant regulatory reforms, and moderately reduce the upper limit of management fees and custody rates. Among them, the annual management rate of equity products shall not be higher than 0.8%, the annual management rate of bond products shall not be higher than 0.3%, the annual management rate of currency and cash products shall not be higher than 0.1%, the annual management rate of equity investment funds shall not be higher than 1.5%, and the annual custody rate withdrawn by the custodian shall not be higher than 0.05%.

(4) Regarding the proportion of investment supervision. According to the practice of fund investment and supervision, comprehensively considering the characteristics of risk and return, the investment varieties of the national social security fund are divided according to deposit and interest rate, credit fixed income, stock and equity, and the full caliber of domestic and overseas investment is included in the regulatory ratio. At present, the maximum investment ratio of stock and equity assets can reach 40% and 30% respectively, which further improves the investment flexibility of the national social security fund and is conducive to continuing to support the development of the capital market.