Major Characteristic of PRC Social Security Scheme
– Only applicable to Chinese local employees
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– 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)