Prc Social Security Scheme Essay, Research Paper

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

- Pension

- Unemployment Insurance

- Medical Insurance

- Housing

National Requirement – Pension

 ?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;

- Comprises 2 elements:

a. Basic Pension Pooling Account

b. Basic Pension Individual Account

 Enterprise Contribution

- 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.

- Among the 20% contribution:

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

 Employee Contribution

- 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.

 Mandatory participants

- Requires mandatory participation by enterprises and employees;

- ?Enterprise? refers to ?Urban enterprises and institutions?, including:

a. State-owned enterprises;

b. Urban collective enterprises;

c. Foreign investment enterprises;

d. Urban private enterprises; and

e. Other urban enteprises

- ?Employee? refers to ?Staff and workers of urban enterprises and institution?

 Contribution

- 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

 Mandatory participants

- Requires mandatory participation by enterprises and employees;

- ?Enterprises? refers to ?all urban enterprises?, including:

a. State-owned enterprises;

b. Urban collective enterprises;

c. Foreign investment enterprises;

d. Urban private enterprises;

e. Government organizations, institutions;

f. Social organizations; and

g. Non-governmental non-enterprise units.

- ?Employees? refers to ?employees of the above-mentioned enterprises?

 Contribution

- Employer contribution ? approximately 6% of the total wages of the enterprises;

- Employee contribution – 2% of the employee?s wage

National Requirement ? Housing

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

 Mandatory participants

- Requires mandatory participation by enterprises and employees;

- ?Enterprises? refers to ?all urban enterprises?, including:

a. Government organizations, institutions;

b. State-owned enterprises;

c. Urban collective enterprises;

d. Foreign investment enterprises;

e. Urban private enterprises; and

f. Other Urban enterprises.

- ?Employees? refers to ?employees of the above-mentioned enterprises?

 Contribution

- Employer contribution ? minimum contribution 5% of the total wages of the enterprises;

- Employee contribution ? minimum contribution 5% of the employee?s wage

Local Requirements

 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)