Local residents will be kept informed about the use of their pension fund through a new information system to be set up next year.

This is another measure aimed at better managing the fund following a scandal last year.

Shanghai Municipal Government sources said on Wednesday new measures will be drafted on the management of the social security fund. An information transparency system will also be introduced.

"By opening government information to the public, citizens will have a better idea of the income and expenditure of the fund," Bao Danru, the spokesman of the Shanghai Labor and Social Security Bureau, said.

The management of the pension fund will also be subject to public scrutiny, Bao said.

The social security fund was established by the central government in August 2000 to tackle the problem of an increasing aging population in the country.

However, in Shanghai, the fund was embezzled and misused for the building of highways and other construction projects.

Sources said this had happened because of inadequate laws, lack of transparency and public supervision.

Last year, the Shanghai Municipal Government announced new measures would be introduced to safeguard the fund.

"All items of the social security fund will now be placed in a special financial account and no money will be directly paid out from the account. Any spending from the fund will have to be approved and done according to the law," Bao said.

(China Daily September 28, 2007)