CHINA> Social Security Fund In Spotlight
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CHINA> Social Security Fund In Spotlight
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Experts warn of social security fund challenges
By Sun Xiaohua (China Daily)
Updated: 2006-09-30 11:42 The recent exposure of misuse of social security funds in Shanghai may be a symptom of a general challenge to China's management and supervision of welfare money, Xinhua News Agency yesterday quoted experts as warning. He Ping, head of the China Academy of Labour and Social Security, suggested that the country should develop a proper procedure for investment of social security funds, such as in the development of public infrastructure, utilities, energy and other large-scale projects. The case in Shanghai, China's financial centre, involved the alleged misuse of more than 3 billion yuan (US$380 million) from the city's social security funds of some 10 billion yuan (US$1.2 billion). Chen Liangyu, formerly the top Party official of the city, is now involved in a thorough investigation for alleged involvement in the scandal. Nationwide, China's social security funds have witnessed an average increase of 20 per cent annually over the past years, as the country keeps extending the coverage of social security funds. Figures from the Ministry of Labour and Social Security (MOLSS) show that by the end of 2005, the total accumulation of the five social insurance funds insurance for old people, medical care, work-related injuries, unemployment and pregnancy had reached 696.8 billion yuan (US$87 billion). With China's economic reform progressing and more funds being accumulated, their management and supervision have become "a heavy supervision task," Xinhua quoted a source from MOLSS as saying. According to official sources, since 1998 at least 16 billion yuan (US$2 billion) of China's social security funds have been misused, Xinhua said. Currently, China's social security funds are being invested in two ways, to buy treasury bonds (TB) issued by the central government and to generate savings interest from the banks. In TB investment, the rate of return has been lower than 2 per cent recently. Meanwhile the banks, already with huge private savings, are not enthusiastic about managing savings in social security funds, the researcher explained. He noted that in developed countries, about two-thirds of money in social security funds is generated from investment. China's social security funds need to develop more secure ways to diversify their investment. |
