Five Social Insurances and One Housing Fund

Topics: Insurance, Retirement, Pension Pages: 8 (1742 words) Published: April 4, 2014
Five Social Insurances and One Housing Fund

Table of Content

Chapter 1: Introduction 3

Chapter 2: Successful of Shanghai in "Five social insurances one housing fund" 4

Chapter 3: Impacts on Employer 5

Chapter 4: Impacts on Employee 6

Chapter 5: Precautions of Human Resources Management 7

Reference 8


"Five social insurances and one housing fund" was established under Labor Act Chapter 9 Article 73. It is used to serve the purpose on maintaining social harmony by protecting employee's benefits.

"Five social insurances" included endowment insurance, medical insurance, unemployment insurance, employment injury insurance and maternity insurance . "One f und" is referred to h ousing p rovident f und. Endowment, u nemployment , and medical insurance is to be paid by employee and the employer together whereas maternity and employment injury insurance only paid by employer.

However, the five insurance is statutory under Labor Law while h ousing provident fund doesn't. Each province has its own rate dependents on the economic development needs and other social factors. In recent years, Shanghai has the highest insurance payment rate among China.

Calculation on monthly insurance and housing provident fund payment in Shanghai

Monthly payment of insurance and housing provident fund

= Individual income before tax per month* × payment percentage

*Equal to average salary per month in last financial year x 60% - 300%

Average salary per month in 2012 is (RMB) 4692, therefore

Minimum and maximum range (RMB) = 4629*0.6 - 4692*300

= 2815 - 14067

Therefore, individual is required to pay for insurance in accordance to the following table:

Shanghai Standard Payment of Social Insurance and Provident Fund 2013/14




E ndowment Insurance



Medical Insurance



Unemployment Insurance



Maternity Insurance


Employment Injury Insurance


Housing Provident Fund



*Noted that for those who are taking unemployment insurance, they do not need to pay for Medical Insurance


Figure 1

According to figure 1, it showed that the pay ratio of Shanghai enterprise was higher than Beijing and Guangzhou while the ratio for individuals were the same. The reason of the high ratio fee is to protect the worker's income, so that the workers would not need to pay half of their income for insurance payment. Therefore, the living standards for the workers would keep in average.

In this few years, the development of other cities in China was being fast and the insurance package was attractive to workers. So there was a competitive existed between Shanghai and the developing cities. The Shanghai enterprise wanted to retain their workers to stay in Shanghai for work and keep the quality and quantity of the business. Therefore, the standard for the percentage pay of enterprise would be higher than others. Once a worker reach the retire age, the worker will be entitled to receive the insurance premium. This policy would be one of the methods to attract and retain the local worker to work.

On the other hand, as the housing provident fund was not a legal payment in the Labor Act. So the percentage for both enterprise and individuals in Shanghai was the same, 7% each. In the view of HR, the cost for the enterprise would be lower and the intense pressure would be less. And for the individual, they would save the money to buy a property.

Lastly, Shanghai has done a good job in the "5 insurance and housing fund" than other cities like Guangzhou. Although the enterprise need pay more than other cities, the workers would take the greatest benefits and be more loyal to the company.


The social insurance system has implemented for several years,...
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