Chairman of the National Council for Social Security Fund said on Wednesday that they would adopt a conservative investment approach for the management of local pension funds.

Lou Jiwei, who is also a former finance minister, said the approach would ensure that funds have a relatively low exposure to the stock market.

Lou said that seven provinces and municipalities have entrusted pension funds worth 360 billion yuan ($52 billion) to the NCSSF for management and investment. The NCSSF has so far received 137 billion yuan on its account, according to Lou.

"The pension funds have started to enter the stock market but the investment will have a low exposure to the market," Lou said.

"Given the relatively short period of our investment contract (with the local governments), the management of the funds has a low tolerance for volatilities and the investment approach will be conservative," he said.

He added that the management will prioritize investment safety rather than targeting high investment yield.