I. Social Security Contributions Reduced! Pension Insurance Contribution Ratio Lowered to 16%

On March 5th, in the Government Work Report, the Premier clearly stated: In 2019, the burden of enterprise social security contributions will be significantly reduced, with the main contents as follows:

1. Downward adjustment of the unit contribution ratio for pension insurance

The unit contribution ratio for urban employees' basic pension insurance will be lowered in 2019. Specifically, the implementation authority will be delegated to local governments, and the national reference standard is **16%**.

2. No centralized recovery of historical arrears shall be carried out without authorization

Social security contribution collection will continue with the existing method. The state has clearly prohibited local governments from independently conducting centralized recovery of historical arrears, and the actual contribution burden of small and micro enterprises during the restructuring process will not increase by 100%.

3. The current policy of reducing unemployment and work-related injury insurance rates will continue to be implemented

According to Notice of the Ministry of Human Resources and Social Security and the Ministry of Finance on Continuing to Phasedly Reduce Social Insurance Premium Rates (Ministry of Human Resources and Social Security Announcement No. 25 [2018]):

• Starting from May 1, 2018, provinces (autonomous regions and municipalities directly under the Central Government) that implemented a total unemployment insurance premium rate of 1% in accordance with Notice of the Ministry of Human Resources and Social Security and the Ministry of Finance on Phasedly Reducing the Unemployment Insurance Premium Rate (Ministry of Human Resources and Social Security Announcement No. 14 [2017]) .
• Starting from May 1, 2018, pooling regions where the accumulated balance of the work-related injury insurance fund can cover payments for 18 (inclusive) to 23 months may reduce the current rate by **20% on the basis of the current rate; pooling regions where the accumulated balance can cover payments for 24 months (inclusive) or more may reduce the current rate by 50%** on the basis of the current rate.

4. Clearly stated: In 2019, the social security contribution burden of small and micro enterprises will be substantially reduced

II. Social Security Contribution Collection by Tax Authorities is Here! Implemented in Xi'an Since March

On March 6th, a Notice of Xi'an Social Insurance Management Center on Relevant Work Concerning the Transfer of Various Social Insurance Premiums for Enterprise Employees to Taxation Collection leaked, indicating that: Starting from March 2019, all social insurance premiums for enterprise employees in Xi'an will be uniformly transferred to tax authorities for collection, and insured units need to declare to tax departments. The main contents include 3 points:

1. Enterprise social security declaration transferred to tax authorities

The previously suspended transfer of social security contribution collection to tax authorities has made substantial progress. Starting from March in Xi'an, all social insurance premiums for enterprise employees are uniformly transferred to tax authorities for collection! Insured units need to make declarations to tax departments.

2. Tax authorities will not be responsible for recovery of historical arrears, etc.

The state has emphasized many times that local governments are not allowed to recover social security arrears without authorization. The notice also clearly states that historical arrears of medical insurance, maternity insurance, etc. up to February 2019 will be collected by the original competent agencies.

Two points need to be explained:

• Arrears still need to be collected, but not by tax authorities. As for the enforcement intensity, it is currently unknown.
• Social security contributions after March 2019 will be fully collected by tax authorities, which should be very strict.

3. It is expected that other provinces and cities will follow up successively

The Plan for the Reform of the National and Local Tax Collection and Administration System issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council points out that starting from January 1, 2019, all social insurance premiums will be uniformly collected by tax authorities.

III. Pension to be Increased by 5%, Medical Insurance Reimbursement Ratio by an Additional 10%

Report on the Implementation of the Central and Local Budgets in 2018 and the Draft Central and Local Budgets for 2019 clearly states: Starting from January 1, 2019, the basic pension standard for retired employees of enterprises and government organs and institutions will be increased by an average of about **5%**.

It can be predicted that the pension standard after retirement will increase year by year. Based on the current level, it is not difficult to outpace inflation! At the same time, the Government Work Report also clearly stated in the "2019 Government Work Tasks" that the standard of medical insurance subsidies and the reimbursement ratio of critical illness insurance will be increased, with the reimbursement ratio raised from **50% to 60%**.

IV. Several Key Issues Concerning Pensions

Do I have to pay pension insurance for 15 full years?

The answer is: You must pay pension insurance for 15 full years to enjoy pension benefits upon retirement.

The Social Insurance Law stipulates that individuals participating in basic pension insurance who have not paid contributions for 15 cumulative years when reaching the legal retirement age may continue to pay contributions until they have paid for 15 years, and then receive a monthly pension.

Can I stop paying after 15 full years of contributions?

If pension insurance contributions are interrupted midway, they can be resumed, and the cumulative contribution period will not be recalculated. The pension calculated upon retirement is directly related to the length of your contribution period. The longer the contribution period and the more the contributions paid, the more pension you will receive after retirement. Therefore, it is not enough to just pay for 15 years.