Madeline Wood HRONE| SUITE 603, ORIENTAL CENTER, 699 WEST NANJING RD/ 31 WUJIANG ROAD, JINGAN DISTRICT, SHANGHAI, CHINA 200041

China’s Social Welfare

Social Welfare: is the system that provides assistance to needy individuals and families

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China’s Social

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The five insurances The Pension Fund Medical Insurance Work-Related Injury Insurance Maternity Insurance Unemployment Insurance The Housing Fund

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PensionFund

Disclaimer:MostcitiesinChinaimplementaceiling(orcap)oncontributions.Thecalculationfortheceilingfigureisusuallytheaveragemonthlysocialsalaryoverthepreviousyearforthatcitymultipliedby300percent.Therefore,theactualpercentagecontributionforemployersandemployeesislowerthanthepercentagesindicatedbelowwhentheindividualisaparticularlyhighearner.Generally,thesalaryincreasesaboveRMB12,000,thelowertheeffectivepercentagethatneedstobecontributed.

PleaseseeFigure1:“Pension”.

• SocialInsuranceLawoAllemployees,includingruralmigrantworkers,shouldbecoveredbythesocialinsurance

o SystemoBothemployersandemployeesarerequiredtomakecontributionstoapensionfund,unemploymentinsurancefundandmedicalinsurancefund,aswellastheHousingProvidentFund.Employers,butnotemployees,arealsorequiredtocontributetothework-relatedinjuryandmaternityinsurancefunds.

o Thevariousinsurancefundsaremanagedbylocalgovernmentslabororhumanresourcesand

o Socialinsurancedepartmentsthatmanagethesocialinsurancefunds,whiletheHousingProvidentFundismanagedbythelocalgovernment’sHousingProvidentFundManagementCommittee.

o Thefundscollectedmustonlybeusedforthespecificpurposeintended,namelytheprovisionofsocialinsuranceforworkersandretirees

o Thepensionandmedicalinsurancefundsare

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o Composedofpooledcomponents,whichcanbeusedtobenefitanyeligibleemployeeconcerned,whentheybecomeeligible.

o Socialinsurancebenefitsshouldremainwithworkerswhentheymove.However,thisprovisionhasprovedverydifficulttoimplementbecauseofthehighlylocalizednatureofthesocialwelfaresysteminChina.GettingdifferentjurisdictionstoshareinformationisfraughtwithbureaucraticandtechnicaldifficultiesespeciallyforworkerscomingfromruralareasofChina.

• Workers’contributionsarepaidintoapersonalaccount

• Uponretirementthebalanceoftheaccountincludinginterestisdivideinto120instalmentstobepaidoutmonthlyoveraten-yearperiod

• Workersareeligibleforpensionswhentheyreachthestatutoryretirement

• Bothemployeesandemployersarerequiredtomakepaymentstothebasicmedicalinsurancescheme,whichcombinesanindividualaccountwithpooledfunds

• Amountsvaryfromregiontoregion

• Typically,workerscontributetwopercentoftheirindividualwages

• SocialInsuranceLawstatesthatmedicalinsurancefundshouldcoverworkers’medicalcostsbypayingserviceprovidersdirectlyoMostcases,workershavetopayup-frontandrequestreimbursementfromauthoritieslater

• Tobeeligibleforpublicinsurancefunds,hospitaltreatmentsmustbeona

Preapprovedgovernmentlisto Treatmentsoutsideofpre-approvedlistmustbepaidoutofeithertheworker’sindividualaccountortheirownpocket

MedicalInsurance

Work-RelatedInjuryInsurance

• Employersmustmakethecontributions,butinabsenceofsuchcontributionstheemployeecanstillclaimtherelevanttreatmentexpense

• Theadministrativeagencyisobligatedtoforcetheemployertopayforthecostofthetreatmentandoutstandingworkinjuryinsurancecontributions

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Compensationiftheycanprovetheyhaveanemploymentrelationshipwiththeiremployerandthattheinjurysustainedisinfactwork-related• Employeesarenot

Preapprovedgovernmentlisto Treatmentsoutsideofpre-approvedlistmustbepaidoutofeithertheworker’sindividualaccountortheirownpocket

Work-RelatedInjuryInsurance

Requiredtocontributetothematernityinsurancefund,whileemployersmakecontributionsatratesdeterminedbyindividuallocalgovernments

• Maternityinsurancecoversallmaternity-relatedmedicalcosts,

• Paidsolelybytheemployeratratesbetween.5percentandtwopercentofpayrolloVariesaccordingtothehealthandsafetyrisksofspecificindustriesandlocations

• Workersareeligibleforwork-relatedinjury

MaternityInsurance

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Includingbirthcontrol,prenatalcheck-ups,deliveryandantenatalcare,aswellasallowancestobepaidduringmaternityleave

Alivingwage• Manylocalauthoritiesaddresstheissuebyprovidingmigrantworkerswithaone-timepaymentamountingtomuchlessthantowhichtheyarelegallyentitled

TheHousingProvidentFundisnotofficiallypart

ofChina’ssocialinsurancesystem.

• Contributorstothehousingfundcanapplyforpreferentialratemortgages,coverhousingrepairandmaintenancecostsandgetrentsubsidies

• Determinedbylocalgovernment,butcannotbelowerthanfivepercentoftheaveragewageattheenterprise

UnemploymentInsurance

• Employerhasobligationontheemployertoprovidethe“terminationofemployment”evidencetotheemployeewithin15daysofhisorherreleasefromthecompany

• RegulationsonUnemploymentInsurance

• BothworkersandtheiremployerspayintotheunemploymentinsurancethatwaslargelyaffirmedbytheSocialInsuranceLaw

• Manyprovincialandmunicipalgovernmentshavenowsubstantiallycutcontributionratesasameansofreducingcostsforbusinesses

• Basedonsalary• Benefitspaidareverylow

• Unemploymentbenefitsmustbelowerthanthelocalminimumwage,whichisalreadysetataverylowlevelandcaninnowaybeconsidered

• AdministeredbytheMinistryofHousingandUrban-RuralDevelopment

• Oftengroupedwiththefivesocialinsuranceprogramssinceithasasimilarfunction

www.clb.org.hk/content/china’s-social-security-systemwww.investopedia.com/terms/s/social-welfare-system.aspwww.china-briefing.com/news/2012/02/21/mandatory-social-welfare-benefits-for-