Basic Old Age Pension Insurance Scheme for Urban and Rural Residents
城乡居民基本养老保险
Coverage
Voluntary insurance
- Persons above the age of 16 who are not insured in any other public pension scheme, such as farmers, unemployed urban and rural residents, workers in flexible employment.
Excluded (from voluntary insurance)
- Students in school; persons enrolled in the basic old age pension insurance scheme for employees or the old age pension insurance scheme of state authorities and public institutions.
Financing
General finances
- Partly tax-financed (via social pooling fund) and partly capital-funded based on insurance contributions (via notional individual accounts).
- Social pooling fund: tax-financed out of the state budget.
- Notional individual accounts: capital-funded based on contribution payments (incl. allowances paid by the rural collective economic organisations and the state) in individual accounts and capital revenues.
Contribution payments
- Person can choose freely between 12 levels of fixed (lump sum) contribution payments per year: CNY 100, CNY 200, CNY 300, CNY 400, CNY 500, CNY 600, CNY 700, CNY 800, CNY 900, CNY 1,000, CNY 1,500 and CNY 2,000 (further contribution payments can be set by the provincial (regional, municipal) governments depending on the concrete situation).
- Contribution ceiling: the maximum contribution payment is set by the provincial (regional, municipal) governments; the maximum contribution shall not exceed the annual contribution of local persons in flexible employment who chose to participate in the basic old age pension insurance scheme for employees.
Subsidies and state support
- Rural collective economic organisations can provide subsidies on top of the individual contributions (the amount of the subsidy is determined democratically by the villagers’ committee).
- The local governments subsidise the contribution payments of the insured person (the amount of the subsidy is determined by the provincial (regional/municipal) governments); min. amount of subsidy: CNY 30 per person/year in case of the lowest contribution level (the amount of subsidy increases accordingly, when higher contribution levels are chosen); in case of a contribution level of CNY 500 or above, the subsidy must not be less than CNY 60 per person/year.
- The local governments subsidise annually (partially or entirely) the lowest contribution level for severely disabled persons and other persons with difficulties in paying contributions.
- The central government provides subsidies based on its estimate of the minimum amount for the ‘basic pension’ to the local governments in central and western regions and provides 50% of that amount to the local governments in eastern regions.
- Contributions are 100% tax-exempt.
Administration
- The local social insurance authorities and their executive bodies, i.e. ‘the Local Social Insurance Enforcement Agencies’ (社会保险经办机构) manage the scheme.
- The provincial (regional, municipal) governments set up additional contribution levels and report them to ‘the Ministry of Human Resources and Social Security’; they also determine and pay subsidies to the contributions of the insured person, increase the amount for the ‘basic pension’ and report this (including the local measures to determine the basic pension) to ‘the Ministry of Human Resources and Social Security’.
- The central government determines and adjusts the minimum amount for the ‘basic pension’.
Qualifying Conditions
- Retirement age is 60; minimum insurance period: 15 years; person must not be eligible to benefits from any other public old age pension.1
Benefits
Pension benefits
- The pension benefits consist of a flat-rate ‘basic pension’ from the ‘social pooling fund’ and a contributory pension from the notional individual account.
- No specification in law regarding fixed minimum and maximum amounts of pension benefits; minimum pension benefits levelled due to minimum amount for the basic pension, minimum annual contribution regulations and a minimum amount of subsidy provided by the local government.
Factors for benefit calculation
Basic pension
- The central government determines the minimum amount for the ‘basic pension’ (since 01/01/2018: CNY 88).
- Local governments can decide the amount for the ‘basic pension’ and can increase the ‘basic pension’ for those with long contribution periods.
- Adjustments: are based on economic development, price changes and other factors.
Contributory pension
- Notional defined contribution, based on the contributions accumulated in the notional account.
- Monthly life-long annuity (possibility of inheritable rights on the remaining capital) based on the result of dividing the total amount of the accumulated capital by 139 (in 2020).
Taxation and social security contributions
- No nationwide regulations on taxation (regulations vary between provinces, regions and municipalities).
- Pension benefits are not subject to income tax and social security contributions in some local regulations (for example: City of Zhuhai2).
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary insurance
- Persons above the age of 16 who are not insured in any other public pension scheme, such as farmers, unemployed urban and rural residents, workers in flexible employment.
Excluded (from voluntary insurance)
- Students in school; persons enrolled in the basic old age pension insurance scheme for employees or the old age pension insurance scheme of state authorities and public institutions.
General finances
- Partly tax-financed (via social pooling fund) and partly capital-funded based on insurance contributions (via notional individual accounts).
- Social pooling fund: tax-financed out of the state budget.
- Notional individual accounts: capital-funded based on contribution payments (incl. allowances paid by the rural collective economic organisations and the state) in individual accounts and capital revenues.
Contribution payments
- Person can choose freely between 12 levels of fixed (lump sum) contribution payments per year: CNY 100, CNY 200, CNY 300, CNY 400, CNY 500, CNY 600, CNY 700, CNY 800, CNY 900, CNY 1,000, CNY 1,500 and CNY 2,000 (further contribution payments can be set by the provincial (regional, municipal) governments depending on the concrete situation).
- Contribution ceiling: the maximum contribution payment is set by the provincial (regional, municipal) governments; the maximum contribution shall not exceed the annual contribution of local persons in flexible employment who chose to participate in the basic old age pension insurance scheme for employees.
Subsidies and state support
- Rural collective economic organisations can provide subsidies on top of the individual contributions (the amount of the subsidy is determined democratically by the villagers’ committee).
- The local governments subsidise the contribution payments of the insured person (the amount of the subsidy is determined by the provincial (regional/municipal) governments); min. amount of subsidy: CNY 30 per person/year in case of the lowest contribution level (the amount of subsidy increases accordingly, when higher contribution levels are chosen); in case of a contribution level of CNY 500 or above, the subsidy must not be less than CNY 60 per person/year.
- The local governments subsidise annually (partially or entirely) the lowest contribution level for severely disabled persons and other persons with difficulties in paying contributions.
- The central government provides subsidies based on its estimate of the minimum amount for the ‘basic pension’ to the local governments in central and western regions and provides 50% of that amount to the local governments in eastern regions.
- Contributions are 100% tax-exempt.
- The local social insurance authorities and their executive bodies, i.e. ‘the Local Social Insurance Enforcement Agencies’ (社会保险经办机构) manage the scheme.
- The provincial (regional, municipal) governments set up additional contribution levels and report them to ‘the Ministry of Human Resources and Social Security’; they also determine and pay subsidies to the contributions of the insured person, increase the amount for the ‘basic pension’ and report this (including the local measures to determine the basic pension) to ‘the Ministry of Human Resources and Social Security’.
- The central government determines and adjusts the minimum amount for the ‘basic pension’.
- Retirement age is 60; minimum insurance period: 15 years; person must not be eligible to benefits from any other public old age pension.1
Pension benefits
- The pension benefits consist of a flat-rate ‘basic pension’ from the ‘social pooling fund’ and a contributory pension from the notional individual account.
- No specification in law regarding fixed minimum and maximum amounts of pension benefits; minimum pension benefits levelled due to minimum amount for the basic pension, minimum annual contribution regulations and a minimum amount of subsidy provided by the local government.
Factors for benefit calculation
Basic pension
- The central government determines the minimum amount for the ‘basic pension’ (since 01/01/2018: CNY 88).
- Local governments can decide the amount for the ‘basic pension’ and can increase the ‘basic pension’ for those with long contribution periods.
- Adjustments: are based on economic development, price changes and other factors.
Contributory pension
- Notional defined contribution, based on the contributions accumulated in the notional account.
- Monthly life-long annuity (possibility of inheritable rights on the remaining capital) based on the result of dividing the total amount of the accumulated capital by 139 (in 2020).
Taxation and social security contributions
- No nationwide regulations on taxation (regulations vary between provinces, regions and municipalities).
- Pension benefits are not subject to income tax and social security contributions in some local regulations (for example: City of Zhuhai2).
1 Preceding the establishment of the basic old age pension insurance scheme for urban and rural residents in 2014, programs of old age pension insurance for rural and urban residents had been launched in many cities (since 2009). Special transition rules applied to older individuals. For example, persons of age 60 at the time of the schemes’ establishment had the right to a ‘basic pension’ from the scheme without having to meet the minimum contribution requirements.
2 Notice of Zhuhai People’s Government on Printing and Distributing the Measures for the Implementation of Basic Old Age Pension Insurance Scheme for Urban and Rural Residents (珠海市人民政府关于印发珠海市城乡居民基本养老保险实施办法的通知), 珠府[2014]88号.
Legal Basis: Social Insurance Law of the People's Republic of China (中华人民共和国社会保险法); Individual Income Tax Law of the People’s Republic of China (中华人民共和国个人所得税法); Opinions of the State Council on Establishing a Unified Basic Old Age Pension Insurance System for Urban and Rural Residents (国务院关于建立统一的城乡居民基本养老保险制度的意见), 国发[2014]8号.