IRREGULARITIES regarding the use of social security funds are "not rare" due to loose management, according to a media report which also claimed that government officials sometimes gambled away the money.

"The inspection bodies of local social security funds are all overseen by the local governments," the Economy and Nation Weekly said, citing an inside source in the pension management system. "One can use the pension (funds) with a signature from the secretary."

Local governments often misused the funds to invest in infrastructure projects for a couple of months, the report claimed. It alleged that an unnamed local head of a city's pension fund lost 80 million yuan (US$12.7 million) he took from the fund in gambling in Macau.

The report also said other irregularities included putting the money in separate banks and bank accounts to avoid inspection.

It said 2.7 trillion yuan in China's pension funds are managed by more than 2,000 local bodies, making supervision of the funds very difficult. Also, the lack of investment options for the funds has limited returns from the funds.

"The direction is to allow freer investment to increase the value of the funds, but without proper management of the accounts, opening up investment options will result in greater problem and instabilities," said Yang Liangchu, a researcher at the Ministry of Finance.

China is due to complete by June the auditing of the operations of the funds between 2009 and 2011.

Source:shanghaidaily