China Announces Reduced Social Security Contribution Rates

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By Jared Mondschein

April 26—Contribution rates for pension insurance and unemployment insurance can be reduced beginning May 1, 2016, the Chinese Ministry of Human Resources and Social Security said April 14 in a notice.

Regions or localities generally administer the social security system and set specific social tax rates and thresholds but the central government sets basic guidelines for the local governments to follow.

Old-age pension employer contributions, which vary depending on the locality, can be lowered to 20 percent if they are above that amount, according to ministry guidelines. Pension contributions already set at 20 percent can be lowered to 19 percent if the regional pension fund can pay for a pay out for at least nine months.

The unemployment insurance rate, which also varies by locality, can be reduced to a range of 1 to 1.5 percent from 2 percent while the employee contribution rate of 1 percent will be capped at 0.5 percent, the ministry said.

The notice also announced that maternity insurance and basic medical insurance likely will be combined in the future.

To contact the reporter on this story: Jared Mondschein at jmondschein@bna.com

To contact the editor responsible for this story: Michael Baer at mbaer@bna.com

For More Information

The notice by the Ministry of Human Resources and Social Security is available in Chinese at http://www.mohrss.gov.cn/gkml/xxgk/201604/t20160419_238366.html.

More information on payroll issues in China can be found in the China country primer.