China's securities watchdog said on Thursday that institutional investors should invest more in equities to help overcome short-term market fluctuations.

The China Securities Regulatory Commission (CSRC) encouraged institutions to allocate more of their assets to equities and improve long-term returns.

It is important to stick to the concept of "non-intervention" to stimulate the vitality of the market, said Yi Huiman, chairman of the CSRC, in a meeting with major banks, insurers and social security funds.

Also on Thursday, China unveiled its first private pension scheme. It will allow employees to contribute up to 12,000 yuan ($1,855) to their pension fund accounts per year.