PRC Social Security Scheme

 Major Characteristic of PRC Social Security Scheme

– Only applicable to Chinese local employees

– Local requirements may vary from locality to locality.

 Structure of Social Security Scheme

 “Decisions of the State Council Concerning the Establishment of a Unified System of Basic Old-age Insurance for Staff and Workers of Enterprises”(July 16, 1997)

 Structure of the Basic Pension Scheme

– Requires mandatory participation by enterprises and employees;

– Maximum contribution of 20% of the total wages of the enterprises in general unless approved by Labour Bureau and Ministry of Finance.

– For a foreign investment enterprise, the total wages only cover Chinese local employees’ wages.

a. start at 7% of employee salary in 1997, to be gradually reduced to 3%, for contribution into the Basic Pension Individual Account

b. 13% to 17% goes to Basic Pension Pooling Account

– Start at 4% of employee salary in 1997, to be gradually increased to 8%

– Contribution goes to Basic Pension Individual Account

National Requirement – Unemployment Insurance

 “Unemployment Insurance Regulation ” issued by State Council on January 22, 1999.

– Requires mandatory participation by enterprises and employees;

– “Enterprise” refers to “Urban enterprises and institutions”, including:

– “Employee” refers to “Staff and workers of urban enterprises and institution”

– Employer contribution – 2% of the total wages of the enterprises;

– Employee contribution – 1% of the employee’s wage

National Requirement – Medical Insurance

 “Decisions of the State Council Concerning the Establishment of a Basic Medical Insurance System for Urban Staff and Workers ” issued by State Council

– Requires mandatory participation by enterprises and employees;

– “Enterprises” refers to “all urban enterprises”, including:

e. Government organizations, institutions;

g. Non-governmental non-enterprise units.

– “Employees” refers to “employees of the above-mentioned enterprises”

– Employer contribution – approximately 6% of the total wages of the enterprises;

– Employee contribution – 2% of the employee’s wage

 “Administrative Regulation on Housing ” issued by the State Council on April 3, 1999.

– Requires mandatory participation by enterprises and employees;

– “Enterprises” refers to “all urban enterprises”, including:

a. Government organizations, institutions;

– “Employees” refers to “employees of the above-mentioned enterprises”

– Employer contribution – minimum contribution 5% of the total wages of the enterprises;

– Employee contribution – minimum contribution 5% of the employee’s wage

 Local requirements regarding contribution ratios may be different from national requirements, which vary from locality to locality based on the relevant regulations stipulated by local governments.

 A Summary of contribution rations (expressed as a percentage of the employee gross wages) to social security funds in the following cities (as of July 1999)