China Youth Daily carried an article which stated that a number of provinces and municipal governments decided to reduce the employer’s share of withholding of the social security funds which cover pensions, medical payments, worker’s comp, unemployment, and child birth insurance. For example, the pension fund was reduced from 20 percent to 19 percent while unemployment insurance was reduced from 1 percent to 0.8 percent. The article said that the change does not impact the employee part of the contribution. It was reported that the reduction can save the employers as much as 1.2 trillion yuan (US$0.18 trillion) per year. The article quoted an expert, who was asked to clarify, and who gave assurances that reduction will not impact the employees’ social security benefits. The article took the pension as an example and stated that the pension fund consists mainly of savings from the employees’ contributions. It is expected that the reduction will last about two years and will be subject to change. According to statistics, the social security fund’s cumulative savings exceeded 7.024 trillion yuan (US$1.07 trillion) by the end of 2015.
Source: China Youth Daily, June 6, 2016