Seventeen-year-old Sylvia Fleming was pregnant when she was murdered in Omagh in 1998 by Stephen Scott.
He was sentenced to life, but has been taking part in a pre-release scheme.
The prison service said the Victim Information Scheme (PRVIS) gives victims an opportunity to provide and receive information about prisoners.
Miss Fleming went missing in April 1998.
Her body parts were found under the foundations of a partially-built house eight weeks later.
Sentencing Scott in 2000, the judge described him as "thoroughly evil".
He said: "The manner in which her body was disposed of after her murder is surely the most gruesome.
"I am satisfied that you, Scott, not only deliberately killed this young girl but that you planned that killing and carried it out in circumstances so squalid that they would revolt any right-thinking person."
Her sister, Josie Fleming, told BBC Radio Foyle she was contacted by someone who had spotted the killer painting a fence.
"Even though we knew the time was coming we are angry and fearful," she said.
"They need to let us know when he is due for his official release - it's important for us to know when this evil person will be free to walk the streets."
Miss Fleming said she believes Scott is "capable of anything" and should never be freed.
"He took her into his flat, he tied her up in a bed and put a blindfold over her eyes and covered her mouth with tape," Ms Fleming said.
"He injected her with insulin and when she passed away he put her in the attic and then took her down and put her in the bath to cut her up."
"You never can come to terms with what happened, we're learning to live with it but we'll never, ever get over it."
In a statement, the prison service said those who register with the Victim Information Scheme will get details about a person convicted of a crime against them.
They will receive details about any temporary release a prisoner is granted,  the month and year in which a prisoner is expected to be released, any conditions of the prisoner's release and any breaches of those conditions which result in the prisoner's return to custody.
In the case of life-sentence prisoners, the victim can obtain information about the minimum number of years the life prisoner must serve, when the life prisoner is being considered for release and have the opportunity to give views when the prisoner is considered for final release.
The sister of a teenager who was murdered, cut up and buried by her boyfriend says she is afraid after discovering he has been out of prison.