Article China: Law on Social Insurance Passed

(Nov. 4, 2010) On October 28, 2010, the Standing Committee of China's National People's Congress (NPC) passed the People's Republic of China Law on Social Insurance. (Zhonghua Renmin Gongheguo Shehui Baoxian Fa [in Chinese] [hereinafter Social Insurance Law], NPC website, Oct. 28, 2010, http://www.npc.gov.cn/npc/xinwen/2010-10/28/content_1602435.htm.) This long-awaited law has been reviewed by the NPC four times in the almost three years before its publication. (China's Legislature Ends Bimonthly Session, Adopting Social Insurance Law, XINHUANET (Oct. 28, 2010), http://news.xinhuanet.com/english2010/china/2010-10/28/c_13580551.htm.)

This is the first comprehensive law on China's social security system ever adopted by the NPC. Effective from July 1, 2011, the 98-article law regulates basic endowment insurance (a mandatory pension system), basic medical care insurance, workers' compensation, unemployment insurance, and maternity insurance. Highlights of the Law include:

National Pooling of the Basic Pension Fund: China's basic pension fund is comprised of a social pool and individual accounts (Social Insurance Law, art. 15). Currently, the social pool mainly operates at the provincial level. The Law states that national pooling of the pension schemes will be “gradually realized” (id. art. 64.) The national pooling regime, if established, may expedite the development of a unified national labor market and narrow the difference between eastern and western China and between urban and rural areas with regard to social security benefits. Other social security funds, including the medical care fund, will gradually implement provincial pooling (id.). The timetable and measures to implement these provisions will be decided by the State Council (id.). Under the Law, Chinese workers covered by the basic pension system are entitled to retirement benefits paid monthly if they have been working a total of 15 years when they reach the mandatory retirement age (id. art. 16).

Mobility of Pension and Medical Care Insurance: One of the problems that is most often the subject of complaints under the current system is that it is difficult to transfer one's pension and medical care insurance to other places of work. The Law states that when transferring the employment relationship from one area to another, pension and medical care insurance will be moved with the worker and previous years will be calculated accumulatively (id. arts. 19 & 32).

Differential Systems: The Law also regulates the coverage of pension and medical care insurance for rural residents, who had not been covered by the social security system until recent years. Separate pension and medical care systems, however, will be applied to the rural residents. According to the Law, “the state establishes and improves” the “new rural social pension insurance system” and the “new rural cooperative medical care system” to cover rural residents (id. arts. 20 & 24.) There is a separate “urban resident basic medial insurance” covering urban residents who are not covered by the basic medical care insurance (art. 25). Public servants and others who receive benefits matching those of public servants are covered by a separate retirement system, which is regulated separately by the State Council (id. art. 10).

Provisions for Special Workers: The Law applies to migrant workers (rural residents who work in the cities), who may be able to join the social security system according to the Law (id. art. 95). Aliens who are working in China may be able to refer to this Law and join the social security system (id.art. 97).

Implementation of the law will still depend on the implementation regulations; the State Council has been authorized to create those regulations (id.).

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