Prime Minister Manmohan Singh asked the states on Monday to cooperate with the Centre's proposal to allow investing a part of pension funds in stock markets and other options such as bonds.

"The suggestion is being considered is that pending a resolution of all issues relating to the PFRDA Bill, these accumulated funds may be allowed to be invested in accordance with the investment pattern prescribed for non-government provident funds," Singh said in his address to the Chief Ministers' Conference on Pension Reforms.

The prime minister's statement comes at a time when the Left parties are opposing the Pensions Reforms Bill. Singh said the pattern permitted for non-government provident funds would fetch a superior return for new pension system funds than that given by the government at present without compromising on the safety factor.

As per this pattern, five per cent of the funds will be invested in shares of companies that have an investment grade debt rating from at least two rating agencies.

Other broad forms of investment include 25 per cent in central government securities, 15 per cent in state government securities, 25 per cent in bonds and securities of public financial institutions and 30 per cent in any of these three categories.

The Central government employees recruited since January 1, 2004, are under NPS, which is based on a defined contribution system as against defined benefit of the old pension system.