Guangzhou may recover about half of the 1.018 billion yuan of social security fund siphoned off for investment and business operations in the 1990s.

And the government will have to make up the shortfall with the social security fund risk reserves to ensure the interests of the beneficiaries, deputy mayor Zhang Guangning said Monday during a symposium on the management of city's social security fund.

Cui Renquan, head of the city's Labor and Social Security Bureau, explained the progress on recovering the misused fund.

He said, due to historical reasons, over one billion yuan of the city's social security fund was misappropriated for the operation of 25 projects in the 1990s, such as real estate development and treasury bond purchase.

Legal actions have been taken on 19 of the projects, involving 813 million yuan. By the end of 2006, a total of 362.6 million yuan of the misused fund had been recovered, and another 105 million yuan is expected to be returned, leaving a shortfall of more than 600 million yuan.

Zhang said Guangzhou will handle the loss in accordance with suggestions of the National Audit Office. If failing to recover the rest of the fund, the municipal government will fill the gap with social security risk fund, which is reported to have reached a total of 1.1 billion yuan.

A working group headed by the deputy mayor has been set up to recover the misused pension fund and mitigate the loss, Cui said.

Since 2001, the Guangzhou government has set aside 50 million yuan from its annual fiscal budget as pension fund risk reserves to insure full payment to beneficiaries. The risk reserves is deposited into a special account, and cannot be used without the consent of several departments.

Editor: Yan