China to Cut Down on Social Security Requirements to Reduce Enterprise Burden
The Ministry of Human Resources and Social Security along with the Ministry of Finance has joined together and issued a notice that stated the cutting of social security premiums as part of the latest move in hopes to reduce an enterprise burden. The cut will take effect May 1 and employers contribution to the pension fund will be slash down to 19 or 20 percent depending on the conditions. In cases when the employers contribution is more than 20 percent of payroll the rate is lower than 20 percent.
If the employers contribution is at 20 percent, the rate is lowered to 19 percent for the next two years, as long as the total balance of the pension fund in the region will cover nine month payouts. The requirement rate for unemployment insurance payment was 2-3 percent of the payroll last year will be brought down to 1-1.5 per cent with an individual contribution capped at 0.5 percent.
Average contributions to work injuries and childbirth insurance stays the same after respective cuts of 0.25 and 0.5 percent last year, with further categories of childbirth and medical insurance is combined pending any future regulations by the State Council. Autonomous regions, different provinces and municipalities are asked to give out specific plans on the new policy. To respond to the call by the central government that asked for the reduction of the burden on businesses, the 12 provinces and municipalities slashed social security payments requirements for employers and employees by the end of March.