SHANGHAI - China plans to centralize the management of pension funds, state
press has said, a day after Shanghai's Communist Party boss was sacked for
alleged graft involving his city's retirement program.
The Ministry of Labor and Social Security may issue rules early next year
that would take away management of provincial pensions from local governments,
the Shanghai Daily said, citing Chen Liang, a senior official at the ministry.
The top regulator for China's welfare system will oversee the new regime,
which would be a "market-based mechanism" in which independent fund managers are
entrusted with the money, Chen said.
The same rules would apply for corporate annuities, according to Chen.
The report comes after the government announced Monday that Shanghai
Communist Party secretary Chen Liangyu had been sacked from his post and the
Politburo over the misuse of around a third of the city's 1.2-billion-dollar
pension fund.
Over 100 investigators from Beijing are in Shanghai looking at the illegal
investment of about 3.2 billion yuan (US$400 million) in speculative real estate
and highway deals from the pension fund.
Chen became the highest-ranking official to lose his job in a corruption
scandal since former Beijing mayor and politburo member Chen Xitong was removed
from his post on graft charges in 1995.
China now has 230 billion yuan in national-level pensions under its social
security system, mainly to fund living and medical expenses for the elderly and
the poor, the Shanghai Daily said.
The country also has about 100 billion yuan in local pension funds, mostly
corporate annuities, that have been contributed to by companies as employee
retirement benefits apart from basic social security.
Provincial and municipal governments currently decide how those pensions are
invested and usually do not employ professional asset managers or custodians.
As a result, a substantial portion of the money is held in investments such
as real estate projects and long-term loans without public accountability and
subject to low liquidity and high risk, the newspaper said.
