On January 5, 2010 at 3 PM, Vice Minister of the Ministry of Human Resources and Social Security Hu Xiaoyi accepted an exclusive interview and provided on-site interpretation regarding "Achieving Smooth Transfer Across Regions to Protect the Rights and Interests of Insured Persons," while also answering questions from netizens.
China Social Security Network distilled ten practical and effective questions and answers from this interview, hoping to assist netizens in understanding and applying the new policies.
One, The transfer of employer contributions is due to the need for balance between regional social security funds.
[Hu Xiaoyi] According to the original method, when transferring employment across regions, only the individual account funds were transferred, which is the portion contributed by the individual. The new regulation stipulates that besides transferring all principal and interest paid by the individual, a part of the employer's contribution, or the social统筹portion of the funds, must also be transferred. The reason for making this adjustment and improvement decision is because there is a need for balance between regions in terms of social insurance funds. If the transferring location only transfers the individual contributions and not the employer contributions, then the receiving location will have to bear the responsibility of paying pensions in the future, leading to a definite shortage of funds.
However, if all employer contributions are transferred to the receiving location, it could also pose certain problems because we already have over 56 million retirees receiving pensions. These pensions are distributed locally, and their funding comes from the funds formed by the contributions of various employers, used to pay the pensions of retirees. If all employer contributions are transferred out, then ensuring timely and full distribution of current pensions in the transferring location would lead to financial imbalance. Therefore, balancing the financial relationship between the transferring and receiving locations, ensuring current pension disbursement and meeting future pension fund payment needs, determines that if a worker changes employment location, most of the employer contributions should be transferred to the receiving location, i.e., the currently specified 12% employer contribution should be transferred. This 12% roughly equates to about 60% of the total employer contribution, with a smaller portion remaining locally to ensure timely and full disbursement of pensions for retirees.
Two, There are four key steps in handling the transfer and continuation of old-age insurance relationships.
[Hu Xiaoyi] The key steps in handling the transfer and continuation of old-age insurance relationships are fourfold.
The first step is issuing certificates. When a worker leaves a city and cannot confirm whether they will return to work in that city again, or has a clear destination to work in another city, they must go to the social insurance administration office to obtain a participation and contribution certificate. This participation and contribution certificate is quite simple; apart from basic information, the most critical information includes three items: one, the starting time of participation in the local area; two, the actual number of months contributed; three, the total amount stored in the personal account during participation in the local area. These three pieces of information are the most crucial. Having such a certificate means that insured individuals, including migrant workers, have a savings book for their old-age insurance rights, recording their accumulated rights. It is also a solemn commitment from the government regarding the future rights of workers.
The second step is making phone calls. We have published online the contact details of more than 2800 county-level and above social insurance administration offices nationwide. Workers who are unclear about any issues related to the transfer of employment can inquire and consult through these telephone numbers. At the same time, matters related to the transfer and continuation of social insurance relationships between two places can also be handled through these telephone numbers for communication and verification, etc. I would like to take this opportunity to share this website with everyone because many netizens may need to look up information during the transfer process. The website address is www.mohrss.gov.cn. On the right side of the website, there is a "Public Service Information" section, under which there is a "Contact Information for Social Insurance Relationship Transfer Continuation Administration Offices." By clicking on this, you can see sections for each province, click on the province you need, inside which there are sections for each city, and then click on the city, where you can see the district or county you are in. If you need it, the telephone number will be listed there, allowing you to contact them. This is an important step; if you have any unclear issues that require consultation, you can do so through the telephone numbers published online.
The third step is handling procedures. Specifically, mobile personnel or their units can submit transfer continuation applications to the new place of employment, and the rest of the matters will be handled within the specified time by the local social insurance institutions.
The final step is transferring funds. Besides transferring the relationship, the entire accumulated balance in the individual account and the specified proportion of employer-contributed funds must be transferred to the new place of employment. Once this is done, the entire transfer continuation process is completed.
Three, No need to worry about losing rights by transferring only 12%.
[Hu Xiaoyi] I need to clarify a situation here. Many netizens have raised this question: the unit contributes 20% on my behalf, but I only transfer 12%, does this mean my rights are reduced by 40%? Since you only transferred 12% of the funds. I want to tell netizens that the cross-regional transfer of employer contributions, as I mentioned earlier, is to balance the financial relationship between regions, which is a macro-level balance. For individuals, it does not affect the accumulation of personal old-age insurance rights, nor does it affect the calculation of personal pensions. This is because the calculation of personal pensions, according to our system, is based on the amount and duration of one's contributions, and is not directly related to the transfer of funds between regions. Therefore, as long as your contribution period is longer and you contribute more money, these rights will be accumulated, so there is no need to worry about losing rights by transferring only 12%. This issue does not exist.
Four, The principle for receiving pensions is "priority to household registration, calculated from length and later."
[Hu Xiaoyi] Regarding where old-age insurance benefits are received, this issue is slightly more complex due to the variety of possible scenarios. In the interim measures, provisions have been made for various situations. The basic condition is to look at the duration of contributions in various participating locations, following the principle of "priority to household registration, calculated from length and later." That is, if your place of participation and household registration are consistent, you will definitely receive old-age insurance benefits in your place of household registration, i.e., the place of participation. If they are inconsistent, the place where you have contributed for at least ten years will determine your benefit-receiving location. If you have multiple places where you have contributed for at least ten years, the last place where you met the ten-year requirement will determine your benefit-receiving location. If you have contributed less than ten years in all places, your old-age insurance relationship and related funds will be transferred back to your place of household registration, and your place of household registration will be responsible for paying your pension benefits.
Five, A major breakthrough in the provisional measures is overcoming the "household registration boundary."
[Hu Xiaoyi] The biggest problem the provisional measures aim to solve, or achieve a major breakthrough in, is the household registration boundary. Regardless of whether the difference in household registration is between two cities or between urban and rural areas, it will not affect the accumulation of your old-age insurance rights. As described by this netizen, if someone has worked in Beijing for over ten years and has been contributing to the insurance during this period, according to current regulations, if they accumulate contributions for 15 years and reach the age to receive benefits, even if their household registration is not in Beijing, they can still receive their pension in Beijing.
Six, Even without processing a refund, the money personally contributed will not be wasted.
[Hu Xiaoyi] All personal contributions to the old-age insurance, regardless of when, will preserve the interests. Not processing a refund now is for your future greater benefits. Even if you never participate in the insurance again and do not continue contributing, as long as you have not reached 15 years, all personally contributed portions will not face the issue of being unrecoverable. They will all be refunded to the individual. This is not just the principal, but during the preservation of your personal account, interest will continue to accrue according to national regulations, and finally, both principal and interest will be returned to the individual. This point will not result in any loss. Processing a refund now does not mean the money personally contributed is wasted.
Seven, Not processing a refund is to provide more complete protection of the rights and interests of migrant workers.
[Hu Xiaoyi] Refunding actually damages the rights and interests of migrant workers, while not refunding protects their rights and interests. Over the past few years, since the implementation of the policy that migrant workers leaving a city cannot transfer employer contributions but can only transfer personal account funds, a phenomenon has emerged: every year during holidays, a large number of migrant workers process refunds. In some developed coastal areas, tens or even hundreds of thousands of migrant workers process refunds. Many insightful individuals have pointed out that this is the greatest damage to the rights and interests of migrant workers, as they can only refund the portion they personally contributed, while the rights and interests formed by the employer contributions are lost.
Therefore, the Interim Measures stipulate that refunds will no longer be processed, aiming to provide more complete protection of the rights and interests of migrant workers. Here, I will give an example. Let's assume a migrant worker earns one thousand yuan per month. Earning one thousand yuan per month, according to the current contribution ratio, the individual needs to contribute 8%, meaning they need to contribute eighty yuan per month, totaling nine hundred and sixty yuan per year if they work twelve months. If they contribute annually and refund annually, they can get back nine hundred and sixty yuan each year. If they work for fifteen years, they would have contributed thirteen thousand four hundred yuan, and then refunded thirteen thousand four hundred yuan, contributing and refunding annually. Although the money contributed is not lost, it is simply contributed and refunded, with no increase or new rights generated.
But what kind of result would be produced by calculating the rights without refunding? The thirteen thousand four hundred yuan over fifteen years is still yours, not just thirteen thousand four hundred yuan, but with annual interest added, it will certainly exceed thirteen thousand four hundred yuan. When you meet the conditions for receiving benefits, if you are male, dividing by the coefficient of 139, you can receive one hundred and three yuan per month. This is called personal account pension.
At the same time, the second calculation comes into play. If the average wage in your local area or the average wage of employer contributions is two thousand yuan, and you earn one thousand yuan per month, and the employer contributes twenty percent of your one thousand yuan salary for old-age insurance fees, meaning the employer contributes two hundred yuan per month, after fifteen years, they would have contributed thirty-six thousand yuan. Although these thirty-six thousand yuan are not counted in the personal account, they form old-age insurance rights. How are these rights calculated at the end? According to your contribution wage base of one thousand yuan, if the local social average wage is two thousand yuan, combining calculations gives a contribution base of approximately fifteen hundred yuan. For each year of contributions, you gain one percentage point of rights. After fifteen years, you can receive two hundred and twenty-five yuan per month as a pension. This is called the basic pension. So the rights you receive are not just the one hundred and three yuan, but also adding two hundred and twenty-five yuan, roughly three hundred and thirty yuan. That's three hundred and thirty yuan per month, three thousand nine hundred and thirty-six yuan per year, nearly four thousand yuan.
In other words, if calculated based on fifteen years of personal contributions amounting to thirteen thousand four hundred yuan, you would recover this amount in three years and four months. So, is it more cost-effective to contribute and refund annually, or to accumulate contributions for fifteen years and then receive three hundred and thirty yuan per month, amounting to three thousand nine hundred and thirty-six yuan per year?
The second calculation refers to the minimum fifteen years of old-age insurance rights. Some people say they are in their twenties and don't need to start contributing yet, waiting until they are in their forties to contribute for fifteen years and then start receiving payments. Contributing for fifteen years gives you fifteen percent, but each additional year you contribute adds one percentage point. If you contribute for thirty years, you would receive six hundred and sixty yuan per month instead of three hundred and thirty yuan. If your salary is not one thousand yuan but higher, reaching the social average wage of two thousand yuan, you could receive one thousand three hundred and twenty yuan per month. If you become a core member of the company and your salary exceeds the social average wage, you would receive even more. This is the second calculation.
The third calculation, not only can you receive this much money, but also this money is paid for life. Regardless of whether you live to be one hundred or one hundred and twenty years old, regardless of whether your personal account funds are exhausted, this standard will always be paid, lifelong. Moreover, the government has established a pension adjustment mechanism, increasing the amount. The State Council has just announced the sixth consecutive adjustment of pension benefits for six years, adjusted by ten percent. Over the past five years, the cumulative adjustment of pension benefits for retired enterprise employees nationwide has been over five hundred yuan. So, considering all these calculations, is it more cost-effective to refund annually or accumulate everything, including corporate contributions and personal contributions?
Eight, Policies need to be formulated for mutual connection between urban employee basic old-age insurance and the new rural insurance.
[Hu Xiaoyi] For migrant workers who have participated in urban old-age insurance, even if they return to the countryside and do not return to urban employment, the Interim Measures have made provisions. There are two situations where they do not return to urban employment, whether it is returning to the countryside to start a business or do something else. One situation is that their participation in urban old-age insurance has already exceeded fifteen years. As long as they reach the specified age to receive benefits, they will be entitled to calculate pensions according to the same standards in the city. If they have not reached fifteen years, clearly they cannot receive monthly pensions as urban employees either. However, their personal rights and interests are still protected, and the personal account funds contributed by the individual will not be damaged, and the contribution years can also be recognized. This requires connection with the new rural social old-age insurance system. However, since the new rural insurance system started pilot programs last year, we are consolidating the new rural insurance system on the one hand, summarizing its experience and improving it, and on the other hand, strengthening policy research and formulating policies for mutual connection between urban employee basic old-age insurance and the new rural insurance. Please give us some time; we need to wait until the system is relatively stable before forming connecting policies. But one thing is certain: after migrant workers return to the city, we will definitely introduce a policy to connect urban and rural old-age insurance.
Nine, Retirees do not need to transfer old-age insurance relationships as all rights are fixed, and pensions can be paid in different places.
[Hu Xiaoyi] The pace of urbanization is accelerating, and changes in population structure have made cross-regional mobility a normal phenomenon. Therefore, many elderly people retire and live with their children, moving to the city where their children work, which is a common phenomenon. We believe this conforms to traditional Chinese values and humanistic traditions.
However, once the elderly retire and their pension collection location and standards are confirmed, there is no need to transfer this relationship (to another place). Because we are currently dealing with the issue of cross-regional transfer and continuation of old-age insurance relationships, mainly to ensure that during the working period and the period of contribution, their old-age insurance rights can be continuously accumulated and calculated. After retirement, all their rights have already been fixed, and there is no longer an issue of further accumulation or connection, so there is no need to transfer this relationship anymore.
Of course, for convenience in collecting pensions, we have already achieved异地payment of pensions through the financial system. Many elderly people I know, who are not in their original place of participation, can collect pensions through such systems. Of course, they can also apply for a bank account in Beijing, thus adopting a route of异地pension disbursement, which is feasible.
Ten, Establishing a temporary old-age insurance contribution account can alleviate the pressure of participation in central cities.
[Hu Xiaoyi] Establishing a temporary old-age insurance contribution account is a special measure. After the implementation of the Interim Measures, the transfer of old-age insurance across regions is moving towards a barrier-free direction. However, we cannot ignore a situation: during the process of urbanization in our country, we must pay attention to preventing some central cities and megacities from becoming overly populated and unable to bear the burden.
We must also prevent some people nearing retirement from transferring employment solely to receive higher pensions in central cities. To prevent such concentrated occurrences, the Interim Measures specify that men aged fifty and women aged forty and above, when changing jobs across regions, according to the rules I mentioned earlier, it is impossible for them to meet the ten-year requirement in their new place of employment. Therefore, they cannot receive old-age benefits there either, so there is no need to transfer their old-age insurance to that place. Since transferring there will not result in receiving old-age benefits there, they will eventually have to transfer back to the place where they met the ten-year requirement or their place of household registration, so there is no need to transfer there.
However, not transferring there would create a problem: they still have eight to nine years or four to five years left, and you cannot deprive these workers of their continued rights to contribute and participate in the insurance. Therefore, a measure was taken: they can work in a new place, regardless of whether they are fifty-eight or fifty-nine years old, but without transferring the old-age insurance relationship. Instead, a temporary old-age insurance contribution account will be established locally. With this account, they can continue to contribute, participate, and accumulate rights. When the time comes, they can receive their pension according to the previously specified principles in the designated place, and all the funds in this temporary account will be transferred to that place. Thus, their rights are safeguarded, and the pressure of participation in central cities is also alleviated. (Summarized and organized based on the interview from the official website of the Chinese government)