Shanghai plans to have watchdog for pension fund

By Cao Li (China Daily)
Updated: 2006-12-07 07:37

SHANGHAI: Shanghai could be getting set to launch a commission to supervise its pension fund next month, according to local media reports.

Insiders said a plan for forming such a commission had been submitted to the Shanghai Municipal Government for approval last month, while all the preparatory work is expected to be completed next month, according to a report yesterday in the Shanghai-based China Business News.

The government news office refused to comment on the report, though a woman in the publicity department of the Shanghai Municipal Labour and Social Security Bureau did not deny it.

No information is available on who might serve on the commission or how it will function.

Insiders said the commission would be made up of members of the standing committees of the municipal people's congress and people's political consultative conference. Experts in the field will also likely be involved.

The commission will likely be in charge of overseeing the pension fund's management, making sure that it is legitimate and transparent.

Shanghai discovered in September that more than 3 billion yuan (US$370 million) from its pension fund, which covers a population of 12 million people, had been invested in highway construction and property deals.

By law, pension funds can only be invested as bank deposits or in national bonds or securities.

Several senior local officials and heads of large State-owned enterprises were sacked and investigated in connection with the case, among them the then-Shanghai Party chief Chen Liangyu.

More scandals have emerged in recent months. Just last month a vice-mayor of Jinhua, in Zhejiang Province, was sacked for misappropriating hundreds of millions yuan from the city's pension fund.

A report by the National Audit Office found that about 7.1 billion (US$887 million) of the 2 trillion yuan (US$250 billion) in the country's pension funds had been misappropriated.

To date, more than 27 provinces have formed commissions to supervise their pension funds, and more are planning to follow suit.

The State legislative body is drafting two laws to tighten oversight of the country's pension funds, according to a recent announcement by the Ministry of Labour and Social Security Bureau.

Shanghai released guidelines for the management of its pension fund last month.

The guidelines emphasise strict and transparent management. Any government department or company involved with the city's fund must release reports on its income and balance. The public also has the right to look into the fund's performance.

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