Decision on the Reform of the Pension Insurance System for Employees of State Organs and Public Institutions
Decision of the State Council on the Reform of the Pension Insurance System for Employees of State Organs and Public Institutions
· Document Number：No. 2  of the State Council
· Area of Law： Insurance
· Level of Authority： Regulatory Documents of the State Council
· Date issued：01-03-2015
· Effective Date：10-01-2014
· Status： Effective
· Issuing Authority： State Council
Decision of the State Council on the Reform of the Pension Insurance System for Employees of State Organs and Public Institutions
(No. 2  of the State Council)
The people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government; all ministries and commissions of the State Council; and all institutions directly under the State Council:
In accordance with the spirit of the 18th National Congress of the Communist Party of China, and the Third and Fourth Plenary Sessions of the 18th CPC Central Committee, the Social Insurance Law of the People's Republic of China, and other provisions, to coordinate the building of the urban and rural social security system, and establish a more fair and sustainable pension insurance system, the State Council hereby decides to reform the pension insurance system for employees of state organs and public institutions.
I. Objectives and basic principles of reform. Guided by the “Deng Xiaoping Theory,” the important thought of “Three Represents,” and the Scientific Outlook on Development, the pension insurance system for employees of state organs and public institutions shall be reformed and a pension insurance system independent from state organs and public institutions, with multi-channel capital sources, multi-level guarantee modes, and socialized management services shall be gradually established, by thoroughly implementing the spirit of the 18th National Congress of the Communist Party of China (“CPC”) and the Third and Fourth Plenary Sessions of the 18th CPC Central Committee, and the decisions and arrangements of the CPC Central Committee and the State Council, adhering to the guidelines of “broad coverage, basic insurance, multiple levels and sustainability,” and focusing on enhancement of fairness, adaptation of mobility, and assurance of sustainability. The following basic principles shall be followed for reform:
1. Combining fairness and efficiency. A mechanism of linking treatment and premium payment shall be established to both satisfy the requirements of focusing on fairness in the redistribution of national income and reflect the different contributions of employees, under which employees who pay more will obtain more and who pay for a longer time will obtain more, to enhance the enthusiasm of entities and employees in participating in insurance and paying premiums.
2. Making rights commensurate with obligations. Employees of state organs and public institutions shall effectively fulfill the payment obligations in accordance with the provisions of the state, enjoy the corresponding pension treatment, and establish a pension insurance financing and distribution mechanism which enables sharing of responsibilities, unified planning and mutual aid.
3. Making the security level adaptable to the level of economic development. Based on the fundamental realities of the country at the primary stage of socialism, the financing and treatment level of pension insurance shall be reasonably determined, to effectively ensure the basic life of the retired people and promote the sustainable development of the basic pension insurance system.
4. Linking the treatment level before and after the reform. Based on the incremental reform, smooth transition shall be realized. Persons who have retired before the reform shall enjoy the existing treatment and be subject to the future adjustments to the treatment. Reasonable connection shall be made with treatment through the establishment of a new mechanism for persons who have started to work after the reform. Transitional measures shall be adopted for persons who have started to work before the reform and retired after the reform to maintain the treatment level.
5. Making resolution of outstanding conflicts and guarantee of sustainable development mutually promote each other. With overall planning and reasonable arrangements consistent with capabilities, the rhythm and intensity of reform shall be accurately grasped. The current outstanding conflicts inconsistent with the basic pension insurance system for urban employees shall be resolved beforehand. Then in combination with the top-level design for pension insurance, the relevant systems and policies shall be gradually improved, by adhering to actuarial balance.
II. The scope of the reform. This Decision shall apply to the entities governed by the Civil Servant Law, state organs (entities) and public institutions managed after the fashion of the Civil Servant Law, and their employees of staffing quota.
III. Implementing the basic pension insurance system combining overall social planning and individual accounts. The basic pension insurance premiums shall be jointly borne by entities and individuals. The basic pension insurance premiums paid by an entity (hereinafter referred to as “premiums paid by an entity”) shall generally account for not more than 20% of the total wages of the entity. The basic pension insurance premiums paid by an individual (hereinafter referred to as “premiums paid by an individual”) shall account for 8% of the wage base for premium payment by the individual, and be withheld by the entity on the individual's behalf. An individual account for the basic pension insurance shall be established by depositing 8% of the amount of the wage base for premium payment by the individual, and such an account shall be composed completely of premiums paid by the individual. The individual wages in excess of 300% of the average wages of local on-the-job employees in the previous year shall not be included in the wage base for premium payment by an individual; where individual wages are lower than 60% of the average wages of local on-the-job employees, the wage base for premiums paid by an individual shall be calculated as 60% of the average wages of local on-the-job employees.
The deposit amount of an individual account may only be used for personal pension, and no money may be withdrawn from the account in advance. Interests shall be calculated according to the recording interest rate announced by the state in a unified manner on an annual basis. Interest tax shall be exempted. Where an insured person dies, the balance in his individual account may be inherited according to the law.
IV. Methods of calculation and payment of the basic pension. Where a person starts to work after the implementation of this Plan, and his or her accumulative premium payment period reaches 15 years, the basic pension shall be paid to him or her on a monthly basis after his or her retirement. The basic pension consists of base pension and the pension from an individual account. The monthly standard of base pension at the time of retirement shall be based on the average amount of the average monthly wages of the local on-the-job employees in the previous year and the average indexed monthly wages for premium payment by the individual, with 1% of the base disbursed for every full year of premium payment. The monthly standard of pension from an individual account shall be the amount of the deposit in the individual account divided by the number of months for pension calculation and payment. The number of months for pension calculation and payment shall be determined according to the average life expectancy of the urban population at the time of retirement of the individual, the retirement age of the individual, interest and other factors (see Annex for details).
Persons who start to work before the implementation of this Decision, retire after the implementation of this Plan, and have paid premiums for 15 years (including the deemed payment period, here and below) in accumulation shall, under the principles of reasonable connection and smooth transition, be paid the transition pension in light of the length of the deemed payment period in addition to the base pension and pension from individual accounts. The Ministry of Human Resources and Social Security shall prepare the specific measures and offer guidance on the implementation, jointly with the relevant departments.
Where a person has reached the retirement age after the implementation of this Plan, but his accumulative premium payment period is less than 15 years, handling of his basic pension insurance relation and the calculation and distribution of his basic pension shall be governed by the Several Provisions on the Implementation of the Social Insurance Law of the People's Republic of China (Order No. 13 of the Ministry of Human Resources and Social Security).
Persons who have retired before the implementation of this Decision shall continue to be paid the basic pension according to the original treatment standards as prescribed by the state, and be concurrently subject to the basic pension adjustment measures.
Special retirees of the state organs and public institutions shall still be paid pensions for special retirees and be subject to adjustment to relevant treatment.
V. Establishing the normal adjustment mechanism for the basic pension. Based on wage increase, price changes, and other circumstances, overall arrangements shall be made for the adjustment to the basic pensions for retired persons of state organs, public institutions, and enterprises, to gradually establish a normal adjustment mechanism giving considerations to the pension insurance treatments of various kinds of employees, share the achievements of economic and social development, and ensure the basic life of required persons.
VI. Strengthening fund management and supervision. Overall planning at the provincial level for the basic pension insurance fund shall be made and improved. Where conditions are not satisfied temporarily, a provincial-level fund transfer mechanism may be established in advance, to specify the responsibilities of the people's governments at all levels for collection, management and payment. State organs and public institutions shall establish separate accounts for the basic pension insurance funds, and manage and use such funds separately from the basic pension insurance funds for enterprise employees. Strict budget management shall be implemented for funds, and the funds shall be incorporated into the special-purpose financial accounts for social security funds and be managed by separating revenues from expenditures to ensure that such funds are used for specified purposes. Supervision of the funds shall be strengthened in accordance with the law, to ensure their security.
VII. Effectively transfer and renew the pension insurance relations. When the insured persons move between the state organs and public institutions within the scope of the same overall planning, only their pension insurance relations shall be transferred, and no fund shall be transferred. When insured persons move out of the scope of the overall planning or between state organs and public institutions, and enterprises, deposit amount of individual accounts of basic pension insurance shall be transferred at the same time the pension insurance relations are being transferred. The amount to be transferred shall be the total amount of 12% of the actual wage based on which the insurance premium is paid in each year after the reform; if the insurance premium has been paid for less than one year, the amount to be transferred shall be calculated on the number of months when the insurance premium has been paid. The premium payment years (including the deemed payment period) of basic pension insurance and the deposit amount of individual accounts after transfer shall be calculated in accumulation.
VIII. Establishing the occupational annuity system. State organs and public institutions shall, on the basis of participating in the basic pension insurance, establishing occupational annuity for their employees. An entity shall pay premiums at the rate of 80% of its total wages and an individual shall pay premiums at the rate of 4% of his taxable wage base. An employee, after retirement, shall receive an occupational annuity on a monthly basis. The specific measures for the occupational annuity shall be prepared by the Ministry of Human Resources and Social Security and the Ministry of Finance.
IX. Establishing and improving a financing mechanism which ensures the payment of pension. State organs and public institutions and their employees shall pay pension insurance premiums in full in a timely manner as prescribed. The social insurance collection institutions at all levels shall strengthen the collection of funds and ensure that all due funds are collected. Governments at all levels shall actively adjust and optimize the structure of the fiscal expenditure, increase investment in social security fund, ensure timely and full payment of the basic pension, while providing appropriate fund guarantee for the establishment of an occupational annuity system, to ensure the smooth and steady promotion of the pension insurance system for state organs and public institutions.
X. Gradually implementing the socialized management services. The socialized management service level of social insurance for state organs and public institutions shall be improved. Unified national social security cards shall be issued extensively. The basic pensions shall be distributed by social service institutions. The building of the work platforms for social security of human resources in sub-districts and communities shall be strengthened, and the building of the service facilities and service networks for the elderly shall be accelerated, to provide convenient and efficient services for the retirees.
XI. Improving the handling and management level of the social insurance. All localities shall, in light of the actual needs for the reform of the pension insurance system for employees of state organs and public institutions, strengthen capacity building of the social insurance agencies, appropriately augment staff, and provide appropriate expenditure and service facilities. The Ministry of Human Resources and Social Security shall be responsible for the management of the basic pension insurance for Central state organs in Beijing and their subordinated public institutions, while managing their occupational annuity funds commissioned in a collective manner. Territorial administration shall be implemented for the basic pension insurance for subordinated entities of Central state organs outside Beijing. Social insurance agencies shall effectively provide registration of participation in pension insurance for state organs and public institutions, declaration of premiums payment, relations transfer, evaluation and payment of treatment, and other services. In accordance with the business handling process and the requirements for the building of the information management system as prepared by the state in a unified manner, a management system shall be established and improved, for unified and collective management data resources at the provincial level, to realize standardized, informationized, and specialized management, and constantly improve the work efficiency and quality of services.
XII. Organizational leadership shall be strengthened. The reform of the pension insurance system for employees of state organs and public institutions, as directly related to the vital interests of the employees of state organs and public institutions, is a work which has broad coverage and requires strong policy support. All localities and departments shall fully understand the significance of the reform, effectively strengthen leadership, carefully organize the implementation, offer accurate interpretation to the objectives and policy of reform to the employees of state organs and public institutions and all sectors of society, and correctly guide public opinion, to ensure the smoothness of the reform. All localities and departments shall develop specific implementation opinions and measures in accordance with this Decision and implement them after reporting to the Ministry of Human Resources and Social Security and the Ministry of Finance for recordation purpose. The Ministry of Human Resources and Social Security shall, jointly with the relevant departments, prepare and implement the implementation opinions of this Decision, strengthen coordination of and guidance for the reform, and study and solve problems encountered in reform in a timely manner, to ensure the implementation of this Decision.
This Decision shall take effect on October 1, 2014. Where the existing provisions are inconsistent with this Decision, the latter shall prevail.
Annex: Table of Months for Calculation and Distribution of Pensions in Individual Accounts
The State Council
January 3, 2015