Pension Fund Scandal Triggers Concern
   2006-09-06 07:23:15       Xinhua
Concerns have arisen over the management of social security funds in China following a scandal in which a Shanghai municipal official, who was responsible for the city pension fund, is being investigated on charges of receiving bribes.

Zhu Junyi, director of the Shanghai Municipal Bureau of Labour and Social Security, has been stripped of his post while the investigation continues. He is suspected of misconduct involving a 3.2-billion-yuan loan of city funds to toll road operator Fuxi Investment Holding Co.

The social security fund has been growing at an annual rate of 20 percent in China. And the fund had exceeded 1.8 trillion yuan (about 230.44 billion U.S. dollars) by 2005, accounting for 10 percent of the country's gross domestic product (GDP) for the same year, according to the Chinese Ministry of Labor and Social Security.

In the meantime, the country has also set aside 200 billion yuan as the strategic reserve for the national social security fund. And corporate annuities from 24,000 profit-making enterprises across the country have surged to 68 billion yuan.

"As the country expands its reform of the pension insurance system, the social security fund has been snowballing, so the task to supervise and manage the fund will remain arduous," said an official with the ministry.

According to the official, who asked not to be identified, at least 16 billion yuan out of the massive social security fund have been embezzled since 1998.

"Some of the embezzled funds can never be recovered," said the official.

Under China's current social security framework, working employees are entitled to benefits of five main insurance programs- pension, unemployment, medical treatment, injury at work, and pre-and postal-natal care if the employees are female.

Apart from funding by the government, the social insurance programs also receive contributions from both employers and employees, who put into the funds every month.

He Ping, head of the China Academy of Labor and Social Security, said, "A noticeable problem with the social security fund is the investment and operation aspect," said He, who shunned purchases of the state treasury bonds citing low returns of less than two percent.

In the past, large sums from the social security fund were placed with major banks. But as the savings deposits from ordinary people have continued to rise, banks have showed reluctance to taking in deposits at a negotiable rate, He said.

He suggested experiments should be made in investing social security funds in highly lucrative business sectors such as transportation, power development, petroleum or even in construction of some major infrastructure projects, since the country's fledgling capital market is volatile and risky. 

Recommend claims the copyright of all material and information produced originally by our staff. All rights reserved. Reproduction of text for non-commercial purposes only is permitted provided that both the source and author are acknowledged and a notifying email is sent to us. holds neither liability nor responsibility for materials attributed to any other source. Such information is provided as reportage and dissemination of information but does not necessarily reflect the opinion of or endorsement by CRI.

 Also on our site
China | World
• Russian Natural Gas Supplies to Balkans Halted
• Three Israeli Soldiers Killed in Friendly Fire in Gaza
• Polanski's Lawyers Seek to Have Sex Case Dismissed
• Foreign Journalists still Not Allowed into Gaza
• US VP-elect Joe Biden to Visit Pakistan
• China Curbs Overseas Trips on Public Expense
Business | Sports | SciTech
• China Issues Long-awaited 3G Licenses
• Wahaha, Danone Start Trademark Arbitration
• GM Reports 31 Percent Sales Decline in U.S. Market
• Call for More Overseas Talents
• Bulgarian Figure Skating Champion Sentenced to 2.5 Years in Prison
• China's Mission to Mars Set for Take-off
Life | Showbiz
• A Seemingly Endless Scandal
• Asian Art Top Show Kicks off in Beijing
• Behind-the-Scene Photos of "Look for a Star"
• Universal Pictures Movies Set New B.O. Record in 2008
• Tan Dun's Deep Pool of talent
• Top 10 Shows in 2008 
• China Drive, Afternoon, 2009-01-07
• China Drive, Afternoon, 2009-01-06
• China Drive, Morning, 2009-01-06
• Official Property Declaration System
• India handed over evidence of Mumbai attacks to Pakistan
• EU delegation holds talks to push for a cease-fire in Gaza
• Mubarak Meets with EU Troika on Gaza Situation
• Bush says any Gaza ceasefire must stop Hamas rocket fire
View the Messages
Director: Liu Chi    Designer: Zhang Nan
Pagemaker: VJ  &  Wang Dandan