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New law to tighten supervision of social security fund

(Xinhua)
Updated: 2007-12-23 16:02

BEIJING -- China's top legislature on Sunday began reading the draft law on social security with an emphasis on strict supervision over the social security fund.

The draft law was submitted to the weeklong 31st session of the Standing Committee of the National People's Congress (NPC), China's top legislature, for first reading.

It states the social security fund is composed of five categories: pension insurance, medical insurance, work injury insurance, unemployment insurance and maternity insurance.

It stipulates all funds should be used for specified purposes only, and no institutions or persons had the right to occupy or embezzle from the fund.

To make management of the fund more transparent, the draft law asks institutions in charge of social security cases to disclose revenue, expenditure, balance and earnings on a regular basis.

"Only after the safety of the social security fund can be guaranteed, can the fund be used for investment operation to maintain and increase the fund value," the draft bill says.

In June, Shanghai courts started hearing cases against officials involved in the social security fund scandal that involved 3.7 billion yuan (502.3 million U.S. dollars).

Investigators found the money had been illegally loaned by a company of the municipal labor and social security bureau to Shanghai Feidian Investment Development Co. Ltd. The company was controlled by tycoon Zhang Rongkun, ranked 16th on the Forbes China rich list in 2005, who was arrested during the investigation into the misuse of pension funds.

The draft law says all governments above the county level should establish supervision systems to safeguard the secure and efficient operation of the fund.

Any embezzlement activities would be punished or investigated under the law, the draft says.

It also states finance departments and audit offices should administrate the security fund at corresponding levels according to their responsibility.

Company representatives, trade unions together with law experts and actuaries could also organize a supervision committee to supervise revenues, expenditures, the investment operation of the social security fund and put forward their proposals.

If the security fund was embezzled, the social security administration departments, financial departments and audit offices should recover the embezzled fund. Illegal income earned from embezzled social security funds should be confiscated and personnel involved would be punished according to the law.



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