China diverts money from pension fund, delays payment: report

BEIJING, July 25: China revealed today that US $ 987 million had been illegally diverted from the country’s pension fund, which had caused delays in payments to more than a million people, the official Chinese newspaper reported today. “Such irregularities must be thoroughly checked and corrected,” the report quoted vice-premier Wu Bangguo as telling provincial officials in charge of the nation’s employment and welfare system. Wu vowed to guarantee living expenses to millions of laid-off workers and retirees through a new unified old-age pension system expected to be introduced throughout the country within three months.

According to Chinese statistics, there were 7.1 million laid-off workers nationwide, about a quarter of whom had already been absorbed into re-employment centres. Analysts say the actual number of unemployed and laid-off workers in China has surged dramatically amid the government’s ambitious plan to reform its state-run firms, many of which have been creaking along for years without anyprofit.

All retired workers, no matter what their former employers’ present financial status, will start getting their pensions from a social public pension fund, from August, the daily quoted Wu as saying.

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“The country’s laid-off workers, discharged because of the ongoing state enterprise reform to cut redundancy, will be accommodated in re-employment centres by the end of September,” Wu said.

“The re-employment scheme was unveiled in Shanghai in 1996 and spread throughout China the following year,” the report said. The plan calls for laid-off workers to sign three-year contracts with the centres, which in turn will pay their minimum living expenses, pension and medical insurance totaling some 3,000 yuan (US $ 361) a year. The old-age pension network is expected eventually to be able to cover Chinese workers in state firms, private companies and joint ventures.