Regulatory Framework

First law:1951.

Current laws:1953 (regulations); 1978, 1995, 1997, 1999, and 2005 (directives); 2009 (guideline on rural pensions); 2010 (social insurance); 2011 (social insurance); 2014 (pension portability and guideline on unified pension for rural andnonsalariedurban residents); 2015 (inclusion of civil servants and public-sector employees); and 2018 (contribution collection).

Type of program:Social insurance, individual account, and noncontributory system.

The basic pension insurance program has two components: a social insurance pension and mandatory individual accounts. The pension schemes for rural andnonsalariedurban residents have two components: a noncontributory pension and individual accounts.

Note: Since July 2011, existing regional and local social security programs, including pooling arrangements, are gradually being unified under the country's first national law on social insurance. The government aims to establish a comprehensive, equitable, and unified pension system that covers both urban and rural residents by 2020.

Coverage

Social insurance and mandatory individual account (Basic pension insurance):Employees (including legally employed foreigners and migrants, and part-time employees) in urban enterprises and urban institutions managed as enterprises; self-employed persons and small business owners with no employees; casual workers; and civil servants and certain public-sector employees.

Noncontributory and individual account (Pension schemes for rural andnonsalariedurban residents):Rural andnonsalariedurban residents aged 16 or older.

Exclusions: Students and persons covered under the basic pension insurance scheme.

Source of funds

Insured person

Social insurance (Basic pension insurance):None, or as determined by local government regulations.

Mandatory individual account (Basic pension insurance):8% of gross average monthly covered earnings in the previous year.

The minimum monthly earnings used to calculate contributions are 60% of the local average monthly wage for the previous year.

The maximum monthly earnings used to calculate contributions are 300% of the local average monthly wage for the previous year.

Noncontributory (Pension schemes for rural andnonsalariedurban residents):None.

Individual account (Pension schemes for rural andnonsalariedurban residents):A choice of 100yuanto 2,000yuana year based on 12 scales. Local governments may adjust the number and levels of scales.

Self-employed person

Social insurance (Basic pension insurance):12% of the local average monthly wage.

Mandatory individual account (Basic pension insurance):8% of the local average monthly wage.

Noncontributory (Pension schemes for rural andnonsalariedurban residents):None.

Individual account (Pension schemes for rural andnonsalariedurban residents):A choice of 100yuanto 2,000yuana year based on 12 scales. Local governments may adjust the number and levels of scales.

Employer

Social insurance (Basic pension insurance):Up to 20% of payroll, depending on local government regulations.

Mandatory individual account (Basic pension insurance):None.

Noncontributory (Pension schemes for rural andnonsalariedurban residents):None.

Individual account (Pension schemes for rural andnonsalariedurban residents):None.

Government

Social insurance (Basic pension insurance):Central and local governments contribute as employers and provide subsidies as needed.

Mandatory individual account (Basic pension insurance):Central and local governments provide subsidies as needed.

Noncontributory (Pension schemes for rural andnonsalariedurban residents):The central government finances the total cost (at least 88yuana month per insured person) in the central and western regions and 50% of the cost in the eastern region. Local governments cover 50% of the cost in the eastern region and may make additional contributions.

Individual account (Pension schemes for rural andnonsalariedurban residents):Pays contributions for residents living under the poverty line; local governments provide a minimum annual subsidy of 30yuanto the individual account of each insured person (at least 60yuanfor those who contribute at least 500yuan).

Qualifying conditions

Old-age pension (Basic pension insurance):The pension consists of a social insurance pension and a mandatory individual account.

Social insurance pension (central government guidelines):Age 60 (men and professional women), age 55 (nonprofessional salaried women), or age 50 (other categories of women), with at least 15 years of contributions.

Age 55 (men) or age 45 (women) with at least 15 years of contributions if employed in arduous or unhealthy work.

The minimum pension is paid with at least 15 years of coverage.

Early pension: Age 50 (men) or age 45 (women) with at least 10 years of contributions and assessed with a total disability; age 55 (men) or age 45 (women) with eight to 10 years of continuous contributions if employed in arduous or unhealthy work.

Insured persons who reach the normal retirement age with less than 15 years of contributions may continue making contributions until they reach 15 years or transfer their pension entitlements to the schemes for rural andnonsalariedurban residents. Those who joined the basic pension insurance program before 2011 and have at least 10 but less than 15 years of contributions at the normal retirement age may make a lump-sum contribution to become eligible for the basic pension.

Mandatory individual account (central government guidelines):Age 60 (men and professional women), age 55 (nonprofessional salaried women), or age 50 (other categories of women), with at least 15 years of contributions.

Age 55 (men) or age 45 (women) with at least 15 years of contributions if employed in arduous or unhealthy work.

Early pension: Age 50 (men) or age 45 (women) with at least 10 years of contributions and assessed with a total disability; age 55 (men) or age 45 (women) with eight to 10 years of continuous contributions if employed in arduous or unhealthy work.

Insured persons who joined the basic pension insurance program before 2011 and have at least 10 but less than 15 years of coverage at the normal retirement age may make a lump-sum contribution or continue to pay contributions to become eligible for the basic pension. With less than 15 years of contributions, the insured can choose to stop making contributions and receive a lump-sum payment, or to transfer the account balance to the schemes for rural andnonsalariedurban residents.

Old-age pension (Pension schemes for rural andnonsalariedurban residents):The pension consists of a noncontributory pension and an individual account.

Noncontributory pension:Age 60 and not entitled to a social insurance old-age pension under the basic pension insurance program.

Individual account:Age 60 with at least 15 years of contributions and not entitled to an individual account old-age pension under the basic pension insurance program.

Insured persons who reach age 60 with less than 15 years of coverage can continue making contributions to the individual account until they become eligible or make a lump-sum contribution to become eligible for the rural ornonsalariedurban resident's old-age pension.

Disability pension (Basic pension insurance):The pension consists of a social insurance pension and a mandatory individual account.

Social insurance pension (central government guidelines):Must be assessed with a total incapacity for work and not qualify for an early social insurance old-age pension under the basic pension insurance program.

Medical experts of the Labor Ability Appraisal Committee assess the degree of disability.

Mandatory individual account (central government guidelines):No cash benefit is provided.

Survivor pension (Basic pension insurance):The pension consists of a social insurance pension and a mandatory individual account.

Social insurance pension (central government guidelines):The deceased was a pensioner or in covered employment at the time of death.

Eligible survivors include a widow(er) and dependent children and parents.

Funeral grant: Paid when the insured or an immediate family member who was dependent on the insured dies.

Mandatory individual account (central government guidelines):The deceased was a pensioner or in covered employment at the time of death.

An eligible survivor is the deceased's legal heir.

Survivor benefit (Pension schemes for rural andnonsalariedurban residents, individual account):The deceased received or was entitled to receive an old-age pension for rural ornonsalariedurban residents.

Eligible survivors include the deceased's legal heirs.

Cash benefits for insured workers (except permanent disability)

Old-age pension (Basic pension insurance):The pension consists of a social insurance pension and a mandatory individual account.

Social insurance pension (central government guidelines):The pension is the average monthly local wage in the previous year plus the average individual monthly wage used to calculate contributions, divided by two. The result is multiplied by 1% for each year of contributions.

The average individual monthly wage used to calculate contributions is the insured's average monthly wage indexed to the average monthly local wage.

The minimum combined social insurance and mandatory individual account pension is normally 40% to 60% of the average monthly local wage in the previous year, depending on the region.

Early pension: The pension is based on the average local monthly wage in the previous year, the average individual monthly wage used to calculate contributions, and the number of years of contributions.

Mandatory individual account (central government guidelines):The monthly benefit is total employee contributions plus accrued interest, divided by the actuarial month.

The actuarial month ranges from 56 to 233, depending on the insured's age, and is adjusted periodically based on the average life expectancy for the urban population and the interest rate. The actuarial month for an insured person who retires at age 60 is 139. Local governments provide transitional arrangements for workers who began employment before the introduction of mandatory individual accounts in 1997 and who retired on or after January 1, 2006.

After the monthly benefits from the mandatory individual account are exhausted, benefits are paid from a local pooling fund.

The minimum combined social insurance and mandatory individual account pension is normally 40% to 60% of the average monthly local wage during the previous year, depending on the region.

Early pension: The monthly benefit is total employee contributions plus accrued interest, divided by the actuarial month.

With less than 15 years of coverage, a lump sum of the account balance is paid if the insured does not transfer the account balance to the schemes for rural andnonsalariedurban residents.

Old-age pension (Pension schemes for rural andnonsalariedurban residents):The pension consists of a noncontributory pension and an individual account.

Noncontributory pension:At least 88yuana month is paid. The amount of the pension increases with age in some areas.

Individual account:The monthly benefit is total insured person and government contributions plus accrued interest, divided by the actuarial month.

The actuarial month is 139 and is adjusted periodically based on the average life expectancy for the urban population and the interest rate.

After the monthly benefits from the individual account are exhausted, benefits are paid from a local pooling fund.

Permanent disability benefits for insured workers

Disability pension (Basic pension insurance):The pension consists of a social insurance pension and a mandatory individual account.

Social insurance pension (central government guidelines):40% of the insured's average monthly wage in the previous year is paid.

The minimum pension is set by provincial and local governments based on the local standard of living.

Mandatory individual account (central government guidelines):No cash benefit is provided.

Survivorsbenefits for dependents

Survivor pension (Basic pension insurance):The pension consists of a social insurance pension and a mandatory individual account.

Social insurance pension (central government guidelines):A lump sum of six to 12 months of the deceased's last monthly wage is paid, depending on the number of surviving dependents.

Funeral grant: A lump sum of two months of the average monthly local wage in the previous year is paid to the widow(er), children, parents, and grandparents.When an immediate family member who was dependent on the insured dies, 33% to 50% of the average monthly local or enterprise wage in the previous year is paid based on the age of the deceased.

Mandatory individual account (central government guidelines):A lump sum of total employee contributions plus accrued interest is paid. If the insured dies before the normal retirement age, the balance of any employer contributions made to the deceased's individual account before January 1, 2006, is transferred to a local pooling fund.

Survivor benefit (Pension schemes for rural andnonsalariedurban residents, individual account):A lump sum of total insured person and government contributions plus accrued interest minus previous payments to the deceased is paid.

Administrative organization

Department of Pensions and Department of Rural Social Insurance, under the Ministry of Human Resources and Social Security (http://www.mohrss.gov.cn/), provide general supervision.

Provincial or local social insurance agencies administer their respective retirement pension pools and individual accounts. Provincial and local social insurance pools are gradually being consolidated into national pools.

Provincial human resource and social security authorities are responsible for regulatory funds (special reserve funds) to which local pooling funds in the jurisdiction must pay a percentage of their revenue.

Provincial or local social insurance agencies also administer the pension schemes for rural andnonsalariedurban residents.

Local tax authorities under the State Administration of Taxation (http://www.chinatax.gov.cn/) collect contributions (as of January 2019).

Last survey reply:1 July 2018

Last ISSA update:1 July 2018

US$1.00 = 6.62yuan.

Source:https://www.issa.int/en/country-details?countryId=CN&regionId=ASI&filtered=false