Funds News
- Pension fund to get 10 percent of IPOs
Date: 15-Oct-2007 Sources: (Shenzhen Daily)
THE government is likely to require State-owned companies to give 10 percent of their domestic initial public offering (IPO) proceeds to the national pension fund to shore up its financing, the Caijing magazine reported Friday.
The proposed rule would apply retroactively to all share issues by State firms in domestic stock markets since June 2006, according to official sources cited by the magazine.
The direct beneficiary would be the National Social Security Fund (NSSF), a 'fund of last resort?for the underfunded provincial pension programs. It already receives 10 percent of the proceeds of overseas initial public offerings by State firms.
The pension fund could net upwards of 70 billion yuan (US$9.32 billion) in 2008, if the proceeds of all flotations since mid-2006 - IPOs and secondary issues - plus those still to come are pooled together, an NSSF official told the magazine.
'This is only a small step on a very long road and the transferred assets would only be a small part of the State firms' assets,'the official said. 'Even if it is only a small step, it has been hard to achieve.'
The NSSF has said it needs far more than that to address China's huge pensions shortfall before the population starts to age rapidly.
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