About the National Council for Social Security Fund
On August 1, 2000, the Central Committee of CPC and the State Council decided to establish the National Social Security Fund (NSSF) and the National Council for Social Security Fund (SSF) to manage and operate the assets of NSSF.
NSSF serves as the social security strategic reserve centralized by the central government to supplement and adjust the social security spending during the peak time period of the aging of population. The funding sources of NSSF include fiscal allocation from the central government ,the transfer of state-owned capital and the fund investment proceeds, capital raised by other methods approved by the State Council.
SSF, a government agency at the ministerial level directly under the State Council of the People’s Republic of China, is an independent legal institution responsible for the management and operation of NSSF.
SSF has been entrusted to manage three kinds of assets—Firstly, the NSSF ; Secondly, the subsidy from central government to enterprise employee’s basic pension individual accounts of 9 pilot provinces since the end of 2006; Thirdly, part of the surplus of the enterprise employee’s basic pension insurance for some provinces, including that of Guangdong Province since 2012 and Shandong Province since 2015.
Responsibilities of the SSF
◎To manage the capital allocated by the central government, the capital and equity assets derived from reduction or transfer of state-owned shares and capital raised by other methods;
◎To formulate and implement the investment operation strategies of NSSF;
◎To select and entrust investment managers and custodians of NSSF to manage and hold custody of the assets of the Fund, to examine the investment operation and custody of NSSF’s assets, and to directly engage in the investments of its assets to the extent permitted by rules and regulations;
◎To be responsible for the financial management and accounting of NSSF, to prepare periodic financial accounting statements, and to draft financial accounting reports;
◎To regularly disclose the financial condition such as NSSF’s assets, liabilities, equity and proceeds to the public;
◎To earmark funds in a way jointly instructed and designated by the Ministry of Finance and Ministry of Human Resources and Social Security;
◎To perform other duties assigned by the State Council.
Organization Structure-Non-Permanent Committees
According to the Charter of SSF, the SSF has three non-permanent committees, i.e., the Investment Committee, the Risk Management Committee and the Expert Appraisal Committee.
The Investment Committee is SSF’s investment decision-making body, which is composed of permanent members and non-permanent members.
The Investment Committee performs its duties by way of meetings and its main responsibilities are:
1.To analyze and judge the macro-economic situation and the developing trend of the capital markets, examine the strategic assets allocation plan and annual assets allocation plan, submit the plans to the Board for approval, and to examine and approve quarterly assets allocation plans;
2.To examine and approve NSSF’s investment benchmark and the judging criteria for NSSF’s major investments;
3.To examine and approve NSSF’s risk reports;
4.To examine and approve NSSF’s annual performance evaluation report;
5.To examine and approve the selection and dismissal schemes of investment managers and custodians, and to examine and approve the annual evaluation reports on investment managers and custodians and the special inspection reports proposed for consideration by the Chairman and the Vice Chairman in charge of the business;
6.To examine and approve the investment schemes of NSSF’s major investments; to examine and approve investment reports of project proposals and due diligence with respect to equity fund investments and direct equity investments, and reports of due diligence with respect to trust loans and of negotiations of certain project’s contracts;
7.To approve the investment schemes of new products and portfolio strategy adjustment;
8.To examine and approve other significant investment decisions.
The Investment Committee meetings include regular quarterly meetings and irregular day-to-day meetings. The resolutions of the meetings require a two-thirds majority vote by open ballot. The Chairman has veto power on the resolutions of the meetings.
The Risk Management Committee is SSF’s specialized proceeding body of risk management that is accountable to the Chairman. Its members include the Vice Chairman of SSF in charge of risk management, the Secretary-General and other staff of relevant departments who are responsible for risk management. The Vice Chairman of SSF in charge of risk management acts as the head of the committee and there is also a deputy head. The Risk Management Committee is authorized to invite other staff to be present at meetings or be questioned, and to invite external experts to be present to provide advice. Neither the invited staff nor the external experts are entitled to the right of voting.
The Risk Management Committee performs its duties by way of meetings. Its main functions are:
1.To examine and discuss the risk management regime of NSSF;
2.To examine and discuss the risk policies of NSSF;
3.To examine and approve NSSF’s risk governance including the reports of risk evaluation, internal control and inspections on crucial compliance matters;
4.To examine and discuss the judging criteria of major investment projects and major risks;
5.To examine and discuss major investments, major risks and risk management recommendations;
6.To examine and discuss the solutions for major risk events;
7.To receive regular analysis and assessment reports from the risk management-related departments on NSSF’s investment risks;
8.To organize on-site investigations of major investment projects and invested enterprises by relevant departments or members of the Risk Management Committee;
9.To perform other duties on risk management authorized by the Chairman of SSF.
The resolutions of the Risk Management Committee meetings require a two-third majority vote by open ballot and shall be examined and approved by the head of the Committee.
The Expert Appraisal Committee is established when SSF selects investment managers or custodians. The committee shall conduct the selection in accordance with the SSF’s assessment criterion and review procedures and propose a list of candidates for investment managers and custodians and submit the list to SSF for approval.
The SSF currently has nine (9) departments and they are: the General Office, Asset Allocation & Research Department, Finance & Accounting Department, Equity & Fixed-Income Investment Department, Global Investment Department, Equity Management Department (also Industrial Investment Department), Legal & Compliance Department, Information Technology Department, Human Resources Department. In addition, there is a subordinate Administrative Service Center with its independent accounting unit.
Board of SSF
According to the rules of the State Council, the Board is the highest governing body of SSF which is composed of the Chairman, Vice Chairmen and Directors. The Chairman and Vice Chairmen are nominated by the State Council, and the Directors are appointed by the State Council. The Board convenes one to two meetings each year and is responsible for the following functions:
1.To examine and adopt NSSF’s significant policies and strategies concerning its management and operation;
2.To examine and adopt NSSF’s annual operation plan and mid-and-long-term development scheme;
3.To examine the implementation of NSSF’s annual operation plan and to review and adopt NSSF’s annual operation report;
4.To approve NSSF’s major management regimes such as the investment management regime, risk management regime and information disclosure regime;
5.To report to the State Council and its authorized departments on the issues and problems concerning the management and operation of NSSF;
6.To formulate and revise the charter of SSF.
Currently, the issues for the Board’s deliberation include: NSSF’s annual work report, assets allocation plan for the current year and the financial accounting report for the previous year.
Meanwhile, the Board holds a mid-year panel to hear report of the first half year’s work and to discuss and decide priorities for the second half of the year.
Approved by the State Council, members of the fifth Board of SSF are:
Chairman: XIE Xuren
YU Gesheng WANG Zhongmin SHEN Xiaonan
HUA Jianmin, CHENG Siwei, LI Guixian, LIU Zhongli, XIANG Huaicheng, DAI Xianglong, WANG Mengkui, DOU Yupei, WANG Baoan, HU Xiaoyi, JIAO Kaihe, ZHOU Zhongxuan, LIANG Huiling, LIN Shaochun, ZHANG Zuoha, WANG Jianxi, HE Ping.
Size and Assets Allocation of NSSF
As of December 31, 2014, the total amount of assets under management of SSF is RMB 1.535639 trillion, and the total amount of net assets is RMB 1.457329 trillion. Among the net assets, NSSF’s equity capital is valued at RMB 1.240797 trillion, and the equity capital of the individual accounts fund is valued at RMB 110.974 billion, the equity capital entrusted by Guangdong Province is valued at RMB105.558billion.
Among various asset categories, the fixed income assets account for 46.44%, domestic stocks account for 30.67%, overseas stocks account for 8.28%, industrial investments account for 13.65%, cash and equivalent for 0.96%
In 2014, the investment proceeds of assets under management of SSF was RMB 142.460 billion with a rate of return of 11.69%, among which, realized proceeds was RMB 88.384 billion and changes in fair value of trading assets was RMB 54.076 billion. By the end of 2014, NSSF had achieved accumulated investment proceeds of RMB 561.195 billion since its establishment, with an average investment yield of 8.38% annually.
Investment Management of NSSF
SSF takes NSSF’s safety and the maintenance and appreciation of its value as its core business. It pursues an investment philosophy of “Valuable Investment, Long-term Investment and Responsible Investment” while sticking to prudent investment, scientific and refined management and the pursuit of increasing investment returns.
Article 71 of the Social Insurance Law of the People’s Republic of China adopted at the 17th Meeting of the Standing Committee of the 11th National People’s Congress on October 28, 2010, expressly stipulates the important principles such as NSSF’s establishment, funding sources, purposes of usage, investment operation and supervision.
Laws and regulations with respect to fund raising include: the Notice of the State Council on Further Standardizing the Management of Lottery, the Provisional Management Measures on Raising Social Security Funds through Reducing State-owned Shares, and the Implementation Measures on Pooling Social Security Funds through Transferring Partial State-owned Shares in the Domestic Securities Market.
Laws and regulations with respect to the investment operations include: the Interim Measures on the Investment Management of the National Social Security Fund, the Provisional Regulations on Overseas Investment and Management of the National Social Security Fund, etc.
Investment Method and Scope
NSSF adopts an investment method with the combination of direct investment and mandated investment. The NSSF’s assets that are managed by external managers are in the custody of the custodians selected by SSF. Currently there are eighteen (18) domestic investment managers and thirty-four (32) overseas investment managers of SSF.
In accordance with the Interim Measures on the Investment Management of the National Social Security Fund and the Provisional Regulations on Overseas Investment and Management of the National Social Security Fund as well as other relevant rules and regulations, the NSSF’s investment types include:
Domestic Investments: bank deposits, interbank negotiable certificates of deposits, bonds, trust investments, asset-backed securitized products, stocks, securities investment funds, equity investments and equity investment funds, etc.
Overseas Investments: money market products such as bank deposits, bank bills and large transferrable deposits, bonds, stocks, securities investment funds and financial derivatives such as swaps and forwards for the purposes of risk management.
Limits on the Investment Portfolio
NSSF conducts a percentage control on the assets structure through strategic and tactical asset allocation. In order to manage investment operation risks, the investment portfolio of NSSF shall observe the following limits:
Stock Assets ≤ 40%
Bank Deposits + Treasury Bonds + Policy Financial Bonds ≥ 40%
local governments bonds+ Corporate Bonds ≤ 20%
Asset-backed Securitized Products ≤ 10%
Direct Equity Investment ≤ 20%
Equity Investment Fund ≤ 10%
Trust Investment ≤ 10%
Overseas Investment ≤ 20%
Building the First-class Assets Management Institution
The Eighteenth National Congress of the Communist Party of China put forward the magnificent objective of building a well-off society in an all-round way by 2020. In this objective, a more equitable and sustainable social security system which covers all the people in both urban and rural areas stands as a very important component. NSSF is China’s strategic reserve for the country’s social security cause, which plays a crucial role in the realization of the sustainable development of social security, particularly that of the pension system. To that end, SSF will persistently adhere to the approach of making progress while maintaining stability, actively push forward reform and innovation, further intensify the refined and scientific management of investment operation, press for a broader source for fund raising, improve laws and regulations on funds management, reinforce the talent recruitment and team building, ensure NSSF’s safety and the maintenance and appreciation of its value and thus build itself into a first-class asset management institution.
The logo of SSF is composed of a classical and auspicious Chinese symbol “Fang Sheng” and the English abbreviation of “SSF”. The logo is an expression of solidarity, excellence and good luck, which symbolizes good wishes for NSSF to be a fund that bears the people’s livelihood in its heart, keeps the principal, pursues growth and remains safe and liquid.