City publishes new rule for pension funds

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City publishes new rule for pension = funds

Li Xinran

2006-11-02

SHANGHAI'S social security funds can = only be=20 invested into treasury bonds or saved as deposits, according to = Shanghai's=20 new regulations on pension fund management that was published = today.=20

The new regulation is applicable to the management and = operation=20 of four other insurance funds covering unemployment, medical = treatment,=20 pregnancy leave and work injuries. The management of insurance = funds for=20 people living in the city's smaller townships and its migrant = workers will=20 also come under the new guidelines.

The rule regulates = that fund=20 operators should publish the income and expenses as well as the = balance of=20 the funds to the public.

The city's financial operator = should also=20 review the annual budget of the funds handed in by the social = security=20 department. Upon approval by the financial authority and ratified = by the=20 municipal government, the budget will be carried out by the social = security department and put on record at the country's financial = ministry=20 and the ministry of labor and social security.

As well, = the funds=20 operator shall strictly abide by the budget and report the budgets = performance regularly.

The financial and social security=20 authorities shall report to the financial ministry and the = ministry of=20 labor and social security, in accordance with the rule. They are = also=20 ordered to enhance the monitoring of the funds and rectify = problems=20 immediately.

To further enhance the monitoring and = supervision of=20 the funds, the regulation stipulates the establishment of three=20 independent accounts =E2=80=93 a checking account, savings account = and a specific=20 financial account under state-owned or state controlled banks.=20

Earlier reports said the city's social security authority = had been=20 in sole control of the funds.

The specific account will = act as a=20 bridge for the two other accounts and will hold the interest = generated and=20 subsidies offered by the government.

Since late August, = state=20 investigators have been looking into claims that billions of yuan = have=20 been misappropriated from the city's pension fund.

The = city's=20 corporate annuities have reportedly been misused to provide = improper loans=20 without sufficient collateral and for risky long-term investments = in real=20 estate and other ventures.

The investigation has so far = brought=20 down several senior city government officials and corporate = executives,=20 and has led to the dismissal of Shanghai's Party secretary and the = head of=20 the pension fund.

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