Shanghai's pension funds to be managed by new firm

A new pension management firm will be set up to run Shanghai's more than 10 billion yuan (US$1.3 billion) of corporate annuities following last year's scandal over the misuse of the city's corporate pension scheme.

Changjiang Pension Fund Co, based in Shanghai, will be set up within one year with a registered capital of 500 million yuan, the China Insurance Regulatory Commission said yesterday in a Website statement.

Eleven founding members, mostly major state-owned enterprises in the city, will be the shareholders and they include Shanghai International Group, the city government's investment arm, Shanghai Baosteel Group, China's top steel maker, Shenergy Group and Shanghai Airport Group, the statement said.

Ma Li, vice president of Shanghai Pudong Development Bank, will be the chairwoman and general manager of the new company, the statement said.

Earlier media reports said Changjiang Pension would manage corporate annuities of about 7,000 Shanghai-based enterprises. The money is now operated directly by the city's labor and social security bureau.

China requires companies and employees to contribute to a compulsory national social security fund which acts as a pension scheme. Enterprises, however, can offer additional pensions, or corporate annuities, to make up workers' retirement benefits.

In August, state investigators started a probe of the embezzlement of Shanghai's local corporate pensions, where 3.7 billion yuan were misappropriated, including 3.45 billion yuan in principal and 250 million yuan in interest.

The scandal claimed the scalps of several senior officials, including former city Party chief Chen Liangyu. Also, the cases of several government and corporate officials embroiled in the scandal have been transferred to prosecutors for criminal action.

Mayor Han Zheng said in January that the city has retrieved all of the money that was siphoned out of the city's social security fund for illegal loans and investments.

Separately, China's largest pension fund, the National Council for Social Security Fund, will invest more than 100 billion yuan in 2007, with investment in equities capped at 30 percent, Xinhua news agency said.

"Safety and prudent investment remains our top priority," said Xiang Huaicheng, chairman of the NSSF, yesterday. "The NSSF enjoyed a 9.3 percent yield last year mostly due to soaring stock prices."

Source:Shanghai Daily