The Housing Provident Fund in China
In China, different cities have different laws and regulations regarding the social securities and housing fund. All Chinese employees and employers are required to contribute the mandatory social insurance and other social benefits such as housing fund and the social security funds on a monthly basis. The Housing Fund, also known as the Housing Provident Fund. In 1999, Housing Fund was established, for the purpose of helping Chinese employees save money in terms of buying their own properties. By doing so, the social stability and security has been guaranteed in China. Together with other types of social welfare programs, Housing Fund is legislated by the government at a national level, but all the local governments have the authority to set up the contribution rates by their own.
The Housing Fund and other social insurances
The ministry of human resources and social security regulated the welfare and social security system, and there are five social insurance items in the welfare program: the maternity, medical, pension, work-related injury and unemployment insurances.
When it comes to Chinese welfare system, the Housing Fund is generally administrated respectively by the Ministry of Housing or other local Housing Funds offices, but always included inside the system. The core difference between Housing Fund and other social schemes is that there is no social pool for the Housing Fund, because all the amount will go to the employee’s personal account. Moreover, the credits can only be withdrawn for specific situations, such as the down payment, construction, purchase, renovation of the property and paying back a mortgage.
Example: Base and Rate of Publicly Accumulated Housing Fund in Shanghai
The rate of publicly accumulated housing fund payment for employee and employer and employer is 7% respectively.
Contribution Base= the previous year monthly average salary of the employee.
Employees who start new work from January 1st, 2015 shall calculate the housing fund contribution base in accordance with the employee’s second month salary or the actual monthly average salary since the employee start new work.
Employees who joined from January 1st, 2015 shall calculate the housing fund contribution base in accordance with the month salary after joining or the actual average salary.
For 2015 (July 1, 2015-June 30, 2016), the upper limit of publicly accumulated housing fund contribution base is RMB 2,290, the upper limit of small private business and its employees and freelancers is RMB 3,924.
For 2015(July 1, 2015-June 30, 2016), the lower limit of publicly accumulated housing fund contribution base is RMB 254, the lower limits of small private business and its employees and freelancers is according to this standard.
The Amount of Monthly Housing Fund Contribution
The amount of publicly accumulated housing fund monthly payment= contribution Base x (rate of publicly accumulated housing fund payment of employee+ rate of publicly accumulated housing fund payment of employer).