China's social security white paper (full text)
(Xinhua)
Updated: 2004-09-07 11:23

Raising Funds for Basic Old-Age Insurance Through Multiple Channels

As the aging of the population quickens and the number of retirees increases steadily, the pressure on the payment of funds for basic old-age insurance is becoming ever greater. In order to make sure that basic pensions are paid in full and on time, the Chinese Government is raising such funds through multiple channels.

-- Practicing joint premium payment by both enterprises and employees. Generally the premiums paid by enterprises will not exceed 20 percent of the total wage bill of the enterprise, with the specific proportion being determined by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government. Individual employees pay eight percent of their wages as premiums, whereas self-employed individuals and those who are employed in a flexible manner in urban areas pay an amount equal to about 18 percent of the average wage in their locality. In 2003, the basic old-age insurance premium paid by enterprises nationwide totaled 259.5 billion yuan.

-- Increasing the subsidy outlay from the government financial budget for basic old-age insurance funds. The state has called upon governments at all levels to increase the momentum of restructuring their financial expenditure and raise their input into social security. In 2003, state budgets at all levels contributed 54.4 billion yuan toward basic old-age insurance funds,of which 47.4 billion yuan came from the central budget.

-- Establishing a national social security fund. In 2000, the Chinese Government decided to create a national social security fund. Its sources include: funds acquired from reducing state shareholding, stock ownership assets, funds from the central budget, funds raised by other means approved by the State Council, and investment returns. The national social security fund is administered by the National Social Security Fund Executive Council, and is operated on market principles in accordance with the procedures and requirements prescribed by the "Interim Measures for the Management of the Investment of the National Social Security Fund." The national social security fund provides an important financial reserve for the implementation of old-age insurance and other social security programs. By the end of 2003, it had accumulated over 130 billion yuan.

Promoting the Socialization of Management and Services for Old-Age Insurance

In the past, Chinese enterprises were responsible for both the issuance of basic pensions to their own retirees and the administration of those retirees. Now, to ensure that all retirees receive their basic pensions in full and on time, and lessen the burden of social affairs on enterprises, the government is actively practicing the delivery of basic pensions by social service institutions. At the end of 2003, the basic pensions of retirees from enterprises were all delivered by social service institutions, and 84.5 percent of those retirees were under the administration of such institutions.

In 2003, the Chinese Government began to implement an information-based labor security project, or popularly called "golden social security project," in order to raise the overall management level of social insurance and to meet the needs of the floating labor force to continue with their social insurance coverage once they change jobs. The goal of the project is to realize computer-based networking of social security information across the country. So far the networking of old-age insurance information between the Central Government and the provinces has been initially effected.

Establishing a Multi-Level Old-Age Insurance System

In recent years, the Chinese Government has made great efforts to build a multi-level old-age insurance system. In addition to participating in the compulsory basic old-age insurance, enterprises with suitable conditions may set up annuities for their employees. Both enterprises and individuals will contribute to this annuity, which will be accumulated wholly for that specific purpose and managed in the form of personal accounts. The enterprise annuity funds will be managed and operated in accordance with the market mechanism. In 2003, nearly seven million people participated in the enterprise annuity program. In addition, the state also encourages personal savings for old age.