Research On Feasibility And Efficacy Of Investing Pension Fund In Private Equity

China economy gains a fast development during thirty years since the enforcement of the Reform and Open Policy. But the development of capital market lags behind. Wuxiaoling pointed out that there are two weaknesses in our capital market:one is that corporation bonds lag behind, which makes it hard for corporations to optimize the capital structure; the other is that PE is not perfect, which makes it hard for small enterprises to finance.In China the scale of Private Equity is small and the source of fund is narrow, on the other hand, Pension Fund can only be invested in Treasury Bond and Bank Savings, which grand the fund very low earnings.Based on this situation, this paper describes PE and its features firstly, and recall the history of PE in America secondly, points out the disadvantages of our pension fund investment, and at last it comes to the conclusion that it is the best way to invest pension fund in PE as the Limited Partner. On one hand, this will grand the PE wider fund sources, which will promote the development of PE and create plenty of excellent enterprises; on the other hand, this will grand the pension fund higher earnings to prepare the aging peak.