China's Ministry of Human Resources and Social Security Announces Merger of Maternity Insurance into Basic Medical Insurance, Reducing 'Five Insurances' to 'Four Insurances'
The Ministry of Human Resources and Social Security website today released the “Notice on the Temporary Reduction of Social Insurance Contribution Rates,” proposing a temporary reduction in contribution rates for pension insurance and unemployment insurance. The merger of maternity insurance and basic medical insurance will be implemented uniformly after the State Council formulates and issues relevant regulations.
Below is the original text of the notice:
Notice of the Ministry of Human Resources and Social Security and the Ministry of Finance on the Temporary Reduction of Social Insurance Contribution Rates
MOHRSS Issuance [2016] No. 36
To the Departments of Human Resources and Social Security, and Finance (Financial Affairs) of all provinces, autonomous regions, municipalities directly under the Central Government, and the Xinjiang Production and Construction Corps:
To reduce corporate costs and enhance business vitality, in accordance with the Social Insurance Law of the People's Republic of China and other relevant regulations, and upon approval by the State Council, notice is hereby given on matters concerning the temporary reduction of social insurance contribution rates:
I. Effective May 1, 2016, provinces (autonomous regions and municipalities) where the employer contribution rate for basic old-age insurance for enterprise employees exceeds 20% shall reduce the employer contribution rate to 20%. Provinces (autonomous regions and municipalities) with an employer contribution rate of 20% and a cumulative surplus of the basic old-age insurance fund for enterprise employees at the end of 2015 sufficient to cover more than nine months of payments may temporarily reduce the employer contribution rate to 19% on a phased basis. This reduced contribution rate shall be implemented for a provisional period of two years. Specific implementation plans shall be determined by each province (autonomous region or municipality).
II. Effective May 1, 2016, the overall unemployment insurance contribution rate may be temporarily reduced to 1%–1.5%, building upon the 1-percentage-point reduction implemented in 2015. The individual contribution rate shall not exceed 0.5%. This rate reduction shall be implemented for a provisional period of two years. Specific implementation plans shall be determined by each province, autonomous region, and municipality directly under the Central Government.
III. All localities shall continue to implement the State Council’s 2015 decision to reduce the average work-related injury insurance premium rate by 0.25 percentage points and the maternity insurance premium rate by 0.5 percentage points, along with relevant policy provisions, ensuring full implementation of these policies. The consolidation of maternity insurance and basic medical insurance shall be organized and implemented uniformly after the State Council formulates and issues relevant regulations.
The adjustment of social insurance contribution rates is a highly policy-sensitive issue that has attracted significant public attention. All localities must align their thinking and actions with the decisions and arrangements made by the Central Committee of the Communist Party of China and the State Council, strengthen organizational leadership, and ensure meticulous implementation. It is essential to improve the incentive and constraint mechanisms for basic old-age insurance, ensure that all contributions due are fully collected, achieve sustainable development and long-term actuarial balance, and guarantee that the benefit standards for insured individuals under various social insurance programs are not reduced and that benefits are paid in full and on time. Efforts should be intensified to promote policy awareness and properly guide public opinion. Specific plans for adjusting contribution rates formulated by each locality shall be implemented after approval by the provincial-level people’s government and filed with the Ministry of Human Resources and Social Security and the Ministry of Finance.
All localities shall promptly report to the Ministry of Human Resources and Social Security and the Ministry of Finance on their implementation of this Notice and any issues encountered in the course of their work.
Ministry of Human Resources and Social Security
Ministry of Finance
April 14, 2016
Detailed Explanation on Social Security Adjustments at the Press Conference Held by the Ministry of Human Resources and Social Security:
According to Li Zhong, Deputy Director of the Policy Research Department of the Ministry of Human Resources and Social Security and spokesperson for the ministry, efforts to expand coverage and collect social insurance premiums are advancing steadily.As of the end of March, the number of participants in basic old-age insurance, basic medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance across China stood at 859 million, 689 million, 172 million, 211 million, and 176 million, respectively. From January to March, the total revenue of the five social insurance funds reached RMB 1.21 trillion, a year-on-year increase of 14.7%; total expenditures amounted to RMB 967.7 billion, representing a year-on-year growth of 12.8%.
Temporarily reduce social insurance contribution rates.For a two-year period starting from May 1, 2016, provinces where the employer contribution rate for basic old-age insurance for enterprise employees exceeded 20% shall reduce the rate to 20%; provinces with an employer contribution rate of 20% and a cumulative fund surplus at the end of 2015 sufficient to cover more than nine months of payments may temporarily reduce the rate to 19%.Reduce the total unemployment insurance contribution rate from the current 2% to a temporary range of 1%–1.5%, with the individual contribution rate not exceeding 0.5%.
Social security benefit levels will be increased.Effective January 1, 2016, the basic pension levels for retirees from enterprises and government agencies/public institutions were adjusted, with the overall adjustment amounting to approximately 6.5% of the average monthly basic pension per retiree in 2015; 20 medical rehabilitation items were included in the coverage of basic medical insurance reimbursement; and the fiscal subsidy standard for urban and rural resident basic medical insurance was increased to no less than RMB 420 per person per year.
Strengthen the management and service of social insurance, as well as fund supervision. By the end of March, the number of social security cardholders had exceeded 900 million, reaching 903 million, covering 65.7% of the population. Supporting documents for the administrative measures on the investment of basic old-age insurance funds will be formulated to guide localities in determining entrusted investment plans based on actual conditions.
Comprehensively implement the appointment system and study policy measures to address the use of personnel outside the established staffing quotas in government agencies and public institutions. Gradually improve post-setting management, further standardize the open recruitment system, strengthen research and investigation, and produce a research report on open recruitment for county- and township-level public institutions in remote and hardship areas. Consolidate the achievements in rectifying “ghost employees” and issue guidelines on establishing long-term mechanisms to prevent and address “ghost employee” issues in government agencies and public institutions.
As of the end of March, labor security inspection agencies at all levels across China had investigated and handled 84,000 cases of various labor security violations and proactively inspected 382,000 employers.Recovery of RMB 20.34 billion in unpaid wages and other benefits for workers. A total of 526,000 employers were inspected nationwide, covering 23.83 million migrant workers, and a total of RMB 22.66 billion in back wages and compensation was paid to 2.2 million migrant workers.
In the first quarter, the employment situation remained generally stable.3.18 Million New Urban Jobs Created Nationwide. At the end of the first quarter, the registered urban unemployment rate in China stood at 4.04%, remaining largely stable with a slight decline both quarter-on-quarter and year-on-year. A total of 1.26 million unemployed urban residents were re-employed, and 380,000 individuals facing employment difficulties secured jobs, both figures being broadly consistent with those of the same period last year.
According to employment monitoring data from 500 villages across 10 provinces released by the Ministry of Human Resources and Social Security (MOHRSS), the number of migrant workers seeking employment outside their hometowns in these 500 villages increased by 2.9% from January to March. Data on market supply and demand from public employment service agencies in 100 cities, also provided by the MOHRSS, show a current job-to-applicant ratio of 1.07, indicating that the number of job vacancies slightly exceeds the number of job seekers.
New Progress Made in the Development of Professional and Technical Talent. A total of 300 national-level advanced training courses will be held throughout the year, with a plan to cultivate more than 20,000 high-level professional and technical talents. Twenty new national-level continuing education bases for professional and technical personnel will be established, and 1.27 million person-times of urgently needed, scarce, and core professional and technical talents will be trained.
The development of the skilled talent workforce continues to be strengthened. The recommendation process for the 13th Commendation of Highly Skilled Talents and for candidates to receive the State Council’s Special Allowance in 2016 will be launched.Organize and launch the “Spring Tide Campaign,”Plan to provide vocational skills training to 8 million migrant workers throughout the year.
VCBeat Analysis:
March 2016,In his speeches, Premier Li Keqiang of the State Council has repeatedly emphasized the need to reduce social insurance contribution rates and increase the proportion of take-home pay for employees. Calculations have shown that, taking a 30-year-old employee with a monthly salary of RMB 6,000 as an example, the combined monthly contributions by the employer and the employee amount to more than RMB 2,700, totaling approximately RMB 33,000 per year. Even without considering future salary increases for this employee, over roughly 30 years, by the time he retires at age 60, the total contributions made by both the employer and the employee will have reached RMB 1 million. The merger of maternity insurance and medical insurance,Adjustments to social insurance contribution rates are undoubtedly beneficial for both enterprises and individuals, as they indirectly reduce corporate operating costs and the financial burden on employees.
Driven by the growing elderly population in China, long-term care for seniors has become not only a fundamental social issue but also a new market opportunity. During the 13th Five-Year Plan period, explorations were conducted into the long-term care insurance system. The proposed “New Five Insurances” encompass five areas: medical care, old-age pension, long-term care, work-related injury, and unemployment. If the “New Five Insurances” can be successfully implemented in the future, it will facilitate development in sectors such as the integration of medical and elderly care services.
Secondly, under China’s current system, social security contributions are not merely a matter of covering medical expenses; they carry legal mandates, making compliance a prerequisite for citizens’ participation in various economic activities. The overall reduction in social security contribution rates has indirectly increased citizens’ disposable assets. This accumulated asset dividend across the population creates development opportunities for commercial insurance, which offers greater flexibility and more choices.
Note: Some content is sourced from the Chinese Government Website.