The NPC Standing Committee passed the Social Insurance Law on Oct. 28 with majority votes after reviewing it four times. This was the first time that the supreme legislative body of China has made a law for the social insurance system.
Highlight 1:
Endowment and medical insurances can be transferred freely
What has greatly restrained China's social insurance business is that China does not have smooth channels for transferring individuals' basic endowment insurances. According to statistics of Shenzhen's social insurance department, over 5.8 million people purchased the basic endowment insurance in 2009, but 1 million have canceled it.
The Social Insurance Law passed this time has an issue of insurance transfer under legal protection. "For individuals who transfer their jobs to other coordinating places, their basic endowment insurance will be transferred with them. Their insurance premiums will be calculated in an accumulative format. For individuals who have reached their statutory age of retirement, their basic pensions will be calculated in sections and given out as a whole."
The Law also has provisions regarding the transfer of basic medical insurance. "For individuals who transfer their jobs to other coordinating places, their basic medical insurance will be transferred with them, and their insurance premiums will be calculated in an accumulative format."
Highlight 2:
'National coordination' for endowment insurance
Hu Xiaoyi, deputy minister of the Ministry of Human Resources and Social Security, said that by the end of 2009, all provincial administrative regions in China had formulated systems of provincial-level coordination. A total of 25 provincial units have reached the standards of provincial-level coordination through evaluation, and the evaluation of 27 units is now in progress.
"On this basis, the government will study the national coordination plan of basic endowment insurance," Hu said.
The previous regulations of the social insurance draft law were not clear towards this problem. However, at the last moment before the vote, the draft law made a clear regulation towards improving the coordination level of social insurance. The regulation formulated that the basic endowment insurance funds will gradually realize national coordination and other social insurances will gradually realize provincial co-ordination, and the specific time and steps will be formulated by the State Council.
"The biggest benefit of national coordination is that it can solve China's problem of unbalanced regional development in the vast territory, and can also solve the problem of 'east supporting west' and 'urban area supporting rural area,'" said Zhu Yongxin, a member of the Standing Committee of the NPC.
Highlight 3:
Strengthening social security premium collection
The public has always paid particular attention to the issue that some individuals and units default on their social security premium contributions. Hu said frankly, "Some financially-distressed enterprises are indeed unable to contribute social security premiums because of objective reasons, such as difficult operations, and are on the verge of bankruptcy, but some enterprises have deliberately evaded premium contributions because of weak social security awareness."
Hu noted, "It is hard for the sustainable development of the compulsory social security system without applying compulsory means for social security premium collection.
The newly-approved social security insurance law has strengthened employers' obligations to contribute social security premiums for employees and specified the compulsory measures to punish employers defaulting on social security premium contributions.
There are also some very practical, rigid countermeasures for employers defaulting on social security premium contributions, under which social security premium collection authorities can gain the information on their deposit accounts from banks and other financial institutions and apply to related administrative units for transferring funds from the deposit accounts to social security accounts.
Furthermore, for employers who fail to provide collateral for social security premium contributions, premium collection authorities may also apply to the court to seize, seal up and auction off the employers' properties and use the proceeds as premium contributions.
Highlight 4:
Stricter supervision of social security funds
China's social security funds reached 776.6 billion yuan at the end of 2009, and the safekeeping of the money has come into national spotlight in the wake of several major cases involving the funds in recent years.
Some members of the NPC Standing Committee said many times when examining the draft law that the money should be kept under stricter supervision for safety, given that the funds have reached a very large sum and are widely dispersed.
Fully incorporating suggestions from committee members and representatives, the Social Insurance Law contains detailed provisions for the supervision of social security funds. According to the law, the central government should tighten its supervision of the funds, and the State Council as well as local governments of all provinces, autonomous regions and centrally-administered municipalities should make efforts to establish sound systems for supervising and managing social security funds. In addition, various groups are encouraged to participate in supervision.
It is worth noting that the lawmakers used an entire chapter to make specific provisions on fund supervision. According to the chapter, provincial-level governments should establish special social security fund supervision committees comprising experts as well as representatives of insured people, local companies, and trade unions.
The committees should know well and analyze the revenue and expenditure, management and investment practices of local social security funds. They should also give advice and suggestions on things related to the funds, which is a kind of public supervision.
Furthermore, governments at all levels should regularly report the revenue and expenditure, management and investment practices of social security funds to the standing committees of local people's congresses, which are responsible for examining the enforcement of the Social Insurance Law.
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