If approved by the State Council, the move would be a welcome boost for the country's stock markets. The Shanghai exchange .SSEC has lost a quarter of its value in the past 9 months and is trading 62 percent below its 2007 peak.
China's pension funds - mostly managed at the local level - have struggled to retain the value of their holdings as they can only put workers' savings in bank accounts and government bonds. That often means negative returns when adjusted for inflation.
The proposal could see 10-20 percent of provincial and large city pension fund assets gradually funneled into the stock market, said one of the sources, equivalent to 180-360 billion yuan ($29-$57 billion), based on an official's estimate of pension funds held at the local level."