BEIJING - China is home to more than 220 million people over the age of 60 in China, or 16.1 percent of the population, and the numbers are growing. As the population ages, the country faces the challenge of building a more sustainable pension system.

Since late 2016, China has invested an initial 360 billion yuan ($52 billion) of pension insurance funds from seven provincial-level regions in financial markets.

As the financial lifeline for China's elderly, the flow of that investment has aroused concern among the public. Some observers say that if authorities don't take forceful measures to increase returns, they will face critical risks in operating pension insurance funds.

"I worry most about the sustainability of pension funds," said Yin Weimin, minister of human resources and social security, in a recent interview with Xinhua.

Pensions are traditionally held by banks or used to purchase treasury bills, which yield 2 to 3 percent a year. These yields are far below the market average and sometimes cannot keep up with inflation, leading to depreciation of funds.

There is a positive precedent for increasing pension fund returns.

The National Council for Social Security Fund (NCSSF), which unlike pension insurance funds had not been restricted from investing in financial markets, earned an annual average return of over 8 percent on its investments over the past decade.

A pilot scheme has already seen the provinces of Guangdong and Shandong entrust the NCSSF to manage 100 billion yuan each of their pension funds.

From 2012 to 2015, the NCSSF achieved an average yield of around 7.9 percent on pension funds from Guangdong, according to NCSSF data.

By allowing local pension funds more latitude in investment, China has made a cautious but significant step in tackling the challenges of an aging population.

"Safe investment of pension funds has been and will always be the top priority," said the minister.

Vice minister You Jun last Wednesday called for a cautionary approach when investing pension funds, tempering expectations that large amounts from pension funds would enter the stock market.

"Investing pension funds does not necessarily mean putting them into the stock market -- that is just one of the choices," he said.

The government has set a 30-percent limit on the proportion of pension funds tied up in stocks, while various systems to guarantee fund security, including internal controls and risk provisions, are gradually established, according to You.

The country's 13th Five-year Plan has also vowed that, by 2020, the pension insurance will cover 90 percent of urban and rural residents and basic medical insurance coverage will remain above 95 percent.

China's pension insurance is mainly coordinated at the provincial level, thus specific investment plans vary from region to region.