Lou Jiwei, China’s former minister of finance of China and veteran reformer, has been appointed chairman of the National Social Security Fund (NSSF), China’s largest pension fund.
The new leadership at NSSF, which is looking to boost its exposure to alternative investments in coming years through direct investments and co-investments, comes a year after China’s State Council allowed the pension fund to increase investments in riskier assets such as private equity and stocks with the aim to generate greater returns and boost the size of the fund to cover growing retirement payouts.
The NSSF generated a 15.1 percent investment return in 2015, higher than the 11.7 percent posted in 2014 – its best performance in six years mainly driven by its allocation to alternatives, according to the National Council for Social Security Fund which administers the NSSF.
As of April 2016 nearly a quarter of the 1.8 trillion yuan ($260 billion; €245 billion) fund is allocated to alternatives according to PEI data, with fund commitments in recent years made to CITIC Capital, Fosun Capital Group, Legend Capital and SAIF Partners.
Lou was known as an ardent reformer during his post at the Ministry of Finance. Since joining in 2013, Lou made changes to the budget management system, replaced China’s business tax with value-added tax, advocated for public-private partnerships in infrastructure projects, and implemented policies to swap local government debt with bonds.
Similarly in July, China's $500 billion sovereign wealth fund China Investment Corporation hired a veteran finance tax and reformer as its new president. Former Shanghai vice mayor Guangshao Tu was named as CIC's new chief, he was known for introducing reforms that scaled back government intervention in the market.
Lou will replace Xie Xuren who had been heading the pension fund since 2013, the NSSF said in an announcement on 24 November. Earlier this month, Lou left his post as finance minister and Jie Xiao, a former tax bureau chief who has previously suggested that the Chinese government has room to raise personal taxes, was promoted to the position. Prior to joining NSSF, Lou was previously chairman and CEO of China’s largest sovereign wealth fund CIC and formerly served as vice governor of Guizhou.