China's top social security watchdog took active steps toward
tightening control on investments using social security funds.
From now on, all such funds, excepting amounts due to be paid,
must be placed into banks or used only to purchase state treasury
bonds. All other investment use is prohibited pending revised
regulations, according to a notice by the Ministry of Labor and
Social Security.
These steps were taken in the wake of a publicized scandal in
Shanghai, where 3.2 billion yuan (US$400 million) of pension funds
had been loaned to a local company to build a toll road, resulting
in the local labor bureau chief being sacked.
The notice, posted yesterday on the ministry's
website, further ordered social security funds to be placed
into special accounts, with separate oversight on their collection
and expenditure.
These funds will only be allocated for special uses and only at
the state's discretion, disabling any misappropriation or
embezzlement from government departments or individuals, nor can
they be seized to balance the financial budget, the notice stated.
Pensions must be paid on time and must not be withheld, it
noted.
It required all institutions operating social security funds to
set up a strict application and verification system for work units
and individuals paying insurance premiums. Any misuse or fraud of
social security funds will be met with harsh penalties, it
pledged.
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 US$230.44 billion) by 2005, accounting for 10 percent of the
country's gross domestic product (GDP) for the same year, according
to the Ministry of Labor and Social Security.
In the meantime, a 200 billion yuan (US$25
billion) strategic reserve has been created for the national
social security fund. Furthermore, corporate annuities from 24,000
profit-making enterprises nationwide have surged to 68 billion yuan
(US$8.5 billion).
According to an unidentified ministry official, at least 16
billion yuan (US$2 billion) out of the massive social security
fund has been embezzled since 1998.
(Xinhua News Agency September 15, 2006)