FREE ESSAY ON PRC SOCIAL SECURITY SCHEME

PRC SOCIAL SECURITY SCHEME

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)