Paving the Yellow Brick Road: China's New Rules for Pension Funds'Overseas Investments
June 02, 2006 | BY
clpstaff &clp articlesIn a bid to raise returns and diversify its portfolio, the PRC's National Social Security Fund has asked foreign institutions to apply to manage its billions of dollars in pension funds to be invested overseas. What type of investments are permitted and what mechanism has been put in place to safeguard the overseas management of the investment funds?
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By Michael G. DeSombre and Jie Wei, Sullivan & Cromwell LLP
The long-awaited Tentative Provisions for the Administration of Overseas Investment (Provisions) by the National Social Security Fund (NSSF), promulgated jointly by the PRC Ministry of Finance, the PRC Ministry of Labour and Social Security, and the People's Bank of China, became effective on May 1 2006. The Provisions pave the way for the NSSF to make investments outside of the People's Republic of China (PRC) and allow international fund managers and custodians to reap the rewards of managing, or holding in custody, a large and growing pool of additional capital derived from the PRC's social security funds.