China's Regulation on the National Social Security Fund

• Document Number：Order No. 667 of the State Council
• Area of Law： Civil Affairs
• Level of Authority： Administrative Regulations
• Date issued：03-10-2016
• Effective Date：05-01-2016
• Status： Effective
• Issuing Authority： State Council

Order of the State Council
(No. 667)
The Regulation on the National Social Security Fund, as adopted at the 122th executive meeting of the State Council on February 3, 2016, is hereby issued, and shall come into force on May 1, 2016.
Premier: Li Keqiang
March 10, 2016
Regulation on the National Social Security Fund
Chapter I General Provisions
Article 1 For purposes of regulating the management and operation of the national social security fund, strengthening the supervision of the national social security fund, and realizing fund maintenance and appreciation under the premise of ensuring safety, this Regulation is formulated in accordance with the Social Insurance Law of the People's Republic of China.
Article 2 The state shall set up the national social security fund.
The national social security fund consists of budget allocation from the Central Government, transfer of state-owned capital, fund investment proceeds and funds raised by other means as approved by the State Council.
Article 3 The national social security fund is the national social security reserve fund used to supplement and adjust social security expenditures such as pension insurance during the peak period of the aging of population.
Article 4 The state shall determine and adjust the size of the national social security fund based on the aging of population and economic and social development.
The plans for the collection and use of the national social security fund shall be determined by the State Council.
Article 5 The financial department of the State Council and the social insurance administrative department of the State Council shall be responsible for drafting the measures for the management and operation of the national social security fund, and report the measures to the State Council for approval and implementation.
The National Council for Social Security Fund (“SSF”) shall be responsible for the management and operation of the national social security fund.
Chapter II Management and Operation of the National Social Security Fund
Article 6 The SSF shall manage and operate the national social security fund in a prudential and steady manner, and invest in and operate the national social security fund on domestic and overseas markets at the ratio approved by the State Council.
The SSF shall invest in and operate the national social security fund under the principles of safety, profitability and long-term development, and rationally allocate assets among such assets as fixed-income assets, equity assets and unlisted equity assets approved by the State Council within the range of their rates.
Article 7 The SSF that makes plans for the allocation of assets under the national social security fund and determines major investment projects shall conduct risk assessment and hold collective discussions for decision-making.
The SSF shall develop the measures for risk management and internal control, recognize, measure, assess, monitor and respond to risks in all links of management and operation, and effectively prevent and control risks. The measures for risk management and internal control shall be reported to the financial department of the State Council and the social insurance administrative department of the State Council for recordation.
The SSF shall determine accounting methods in accordance with the law, and report it to the financial department of the State Council for examination and approval.
Article 8 The SSF shall, on a periodical basis, report the information on the management and operation of the national social security fund and submit financial accounting reports to the financial department of the State Council and the social insurance administrative department of the State Council.
Article 9 The SSF may authorize the investment of the national social security fund or make investment by any other methods approved by the State Council.
Article 10 Where the SSF authorizes the investment of the national social security fund, it shall select a professional investment management institution and a professional custodian institution in compliance with statutory conditions to serve as the investment management institution and the custodian of the national social security fund respectively.
The SSF shall select the investment management institution and the custodian under the principles of openness, fairness and impartiality, publish selection information, organize expert review, hold collective discussions for decision-making, and announce the selection result.
The SSF shall determine the methods for the selection of the investment management institution and the custodian, and report to the financial department of the State Council and the social insurance administrative department of the State Council for recordation.
Article 11 The SSF shall enter into the authorized investment contract and custody contract with the retained investment management institution and the custodian respectively, and report it to the financial department of the State Council, the social insurance administrative department of the State Council, the foreign exchange administrative department of the State Council, the securities regulatory authority of the State Council and the banking regulatory authority of the State Council for recordation.
Article 12 The SSF shall determine the methods for the assessment of the investment management institution and the custodian, and according to the assessment of the investment in and custody of the national social security fund by the investment management institution and the custodian respectively according to assessment methods. The assessment result shall be taken as the basis for the continual engagement of the institution or not.
Article 13 The investment management institution of the national social security fund shall perform the following functions:
(1) Investment with the national social security fund.
(2) Withdrawal of risk reserve for the investment and management of the national social security fund as required.
(3) Reporting of investment information to the SSF.
(4) Other functions prescribed by laws, administrative regulations and rules of the relevant departments of the State Council.
Article 14 The custodian of the national social security fund shall perform the following functions:
(1) Safe custody of property under the national social security fund.
(2) Handling of clearing and settlement matters in a timely manner according to the investment instructions of the investment management institution of the national social security fund as stipulated in the custodian contract.
(3) Supervision of the investment made by the investment management institution of the national social security fund according to the relevant provisions and as stipulated in the custodian contract.
(4) Execution of instructions of the SSF, and reporting of the custody information.
(5) Other functions prescribed by laws, administrative regulations and rules of the relevant departments of the State Council.
Article 15 Property under the national social security fund shall be independent from the inherent property of the SSF, the investment management institution and the custodian, and be independent from other property invested by the investment management institution and under the custody of the custodian.
Article 16 The investment management institution or the custodian of the national social security fund shall not:
(1) mix the national social security fund with other property for investment and custody;
(2) divulge any undisclosed information on the national social security fund obtained by taking the advantage its position, or use such information to conduct or explicitly or implicitly advise any other person to conduct the relevant trading activities; or
(3) commit any other conduct prohibited by any law, administrative regulation or rule of the relevant department of the State Council.
Article 17 The national social security fund shall enjoy tax preferences according to the provisions of the state.
Chapter III Supervision of the National Social Security Fund
Article 18 The state shall establish and improve rules for the supervision of the national social security fund.
No entity or individual shall encroach upon, misappropriate, or illegally invest in or operate the national social security fund.
Article 19 The financial department of the State Council or the social insurance administrative department of the State Council shall, according to its respective functions, conduct supervision of the revenues and expenditures, management, investment and operation of the national social security fund; and if it finds any problem, shall handle the problem in accordance with the law; and if the problem falls outside the department's scope of functions, legally transfer the issue to the foreign exchange administrative department of the State Council, the securities regulatory authority of the State Council, the banking regulatory authority of the State Council, or any other relevant department for handling.
Article 20 The foreign exchange administrative department of the State Council, the securities regulatory authority of the State Council or the banking regulatory authority of the State Council shall, according to its functions, conduct supervision of the investment management institution's investment in and the custodian's custody of the national social security fund; if it finds any violation of law or regulation, shall handle the violation in accordance with the law, and notify the financial department of the State Council and the social insurance administrative department of the State Council in a timely manner.
Article 21 The supervision of the overseas investment management institution or custodian of the national social security fund shall be conducted by the securities regulatory authority of the State Council and the banking regulatory authority of the State Council according to the cooperation documents entered into with the relevant regulatory authority of the country or region at the place where the investment management institution or custodian is located.
Article 22 The National Audit Administration shall audit the national social security fund at least once each year. It shall release the audit result to the public.
Article 23 The SSF shall select an accounting firm by open bidding to audit the national social security fund.
Article 24 The SSF shall, through its official website and newspapers published nationwide, release to the public the information on the revenues and expenditures, management, investment and operation of the national social security fund nationwide each year, and accept social supervision.
Chapter IV Legal Liability
Article 25 Where the investment management institution or custodian of the national social security fund violates the provision of Article 16 or paragraph 2 of Article 18 of this Regulation, the securities regulatory authority of the State Council or the banking regulatory authority of the State Council shall order it to take corrective action, confiscate its illegal income, and impose a fine of not less than one time but not more than five times the illegal income on it; if there is no illegal income or the illegal income is less than one million yuan, impose a fine of not less than 100,000 yuan but not more than one million yuan on it; give warnings to the persons who are directly in charge and other persons directly responsible, suspend or revoke their relevant practicing qualifications, and impose a fine of not less than 30,000 yuan but not more than 300,000 yuan on them; and if it constitutes any crime, the offender shall be held criminally liable in accordance with the law.
Article 26 Where the SSF violates the provision of this Regulation, the financial department of the State Council or the social insurance administrative department of the State Council shall order it to take corrective action; and take disciplinary actions against the persons who are directly in charge and other persons directly responsible in accordance with law. If it constitutes any crime, the offender shall be held criminally liable in accordance with the law.
Article 27 Any employee of a state authority who abuses power, neglects duty, practices favoritism, or makes falsification in the management, operation and supervision of the national social security fund shall be given a sanction in accordance with the law; and if it constitutes any crime, the offender shall be held criminally liable in accordance with the law.
Article 28 Whoever violates the provision of this Regulation and causes any loss to the national social security fund shall be liable for compensation in accordance with the law.
Chapter V Supplementary Provisions
Article 29 With the approval of the State Council, the SSF may accept the authorization of provincial people's governments to manage and operate social insurance funds, and the management and operation of social insurance funds upon authorization shall be governed by the provisions of the State Council on the investment and management of social insurance funds.
Article 30 This Regulation shall come into force on May 1, 2016.