Scholars and experts welcomed Tuesday a guideline on the
management of the city's social security fund as an investigation
into abuse that has implicated senior officials and business
leaders continues.
They said Shanghai is one of the first cities to demand its fund
be put into a special account, as required by top authorities.
In recent weeks, a pension fund scandal has gripped the city and
led to the sacking of Shanghai Party chief Chen Liangyu and China's
top statistician Qiu Xiaohua among many others.
Shanghai authorities are now investigating Yuan Yonglin,
president and deputy chairman of listed Shanghai Haixin Group.
But an effective supervisory mechanism and transparent
management are still needed to eradicate malfeasance and
embezzlement, the scholars and experts said.
The guideline, issued during Monday's municipal government
meeting, requires the fund to be deposited in a specially-created
account, and its income and expenditure to be independent. It also
required the fund be used only for specific purposes.
"The proper management and use of social security funds, in
defending against all possible risks of abuse, are vital and urgent
tasks," said a statement from the meeting.
China's social security funds have witnessed an average increase
of 20 percent annually of late, posing new administrative
challenges.
Figures from the Ministry of Labor and Social Security show that
by the end of 2005, the total size of the nation's five social
insurance funds pension, medical care, work-related injuries,
unemployment and pregnancy funds had reached 696.8 billion yuan
(US$87 billion).
"Prior to the scandal, which involves the misuse of more than 3
billion yuan (US$380 million) of the city's social security funds,
Shanghai had been a model city in terms of management of the fund,"
Feng Jin, a researcher at Fudan University said yesterday.
"Shanghai has taken some bold steps in the management of the
fund totaling roughly 10 billion yuan (US$1.2 billion), including
the guideline issued on Monday," she added.
However, Wang Dewen, an analyst with Chinese Academy of Social
Sciences, said yesterday that a special financial account cannot
safeguard against misuse of the money.
"They could make up a false record that shows the money still
exists on the account but secretly embezzle it," he said. "The way
to fundamentally resolve the problem is to set up an effective
monitoring mechanism and require transparent transaction
procedures." However, he did agree that these measures were a step
in the right direction and positive changes were being made.
According to Xiang Huaicheng, chairman of the National Social
Security Fund Council, China's social security fund racked up
investment income of 12.14 billion yuan (US$1.52 billion) in the
first nine months of 2006, at a yield of 6 percent.
Thanks to the prime market conditions in the first half of the
year, stock investments contributed 50 percent of the figure, he
said.
(China Daily November 1, 2006)