Laws of the People's Republic of China

   Article 1 In order to guarantee the basic needs of life after retirement for town employees, these Procedures are formulated in accordance with the Plan of Shanghai Municipality for the Implementation of Reform of Endowment Insurance System for Town Employees.

   Article 2 The endowment insurance as defined in these Procedures refers to the social security system, set up through legal procedures, organized and controlled by the competent government department, under which units and employees have the mutual obligation to pay endowment insurance premiums, and retirees enjoy basic endowment insurance treatment according to the payment of premiums for endowment insurance.

   Article 3 These Procedures shall apply to town administrative agencies, enterprises and institutions (hereinafter referred to as units), and employees and retirees of these units.

These Procedures shall not apply to aliens in foreign-invested enterprises or units and personnel otherwise stipulated by the State.

   Article 4 The endowment insurance follows the principles of sharing expenses among the State, units and individuals, combining individual savings with unified planning and mutual aid, and combining guaranty of the basic needs of life for retirees with stimulation of the initiative of employees.

Units have the obligation to pay endowment insurance premiums for their employees while employees have the obligation to pay insurance premiums for themselves.

An employee's rights to have his/her unit pay endowment insurance premiums and to enjoy endowment insurance treatment after retirement are protected by the law and no infringement of these rights by any unit or individual is allowed.

   Article 5 The reform of this Municipality's endowment insurance system aims at phasing in a multi-layer endowment insurance system. In addition to the endowment insurance stipulated in these Procedures, unit supplementary endowment insurance shall be phased in units whose conditions permit, and the employees who can afford it shall be encouraged to carry individual savings endowment insurance.

   Article 6 This Municipality shall set up the Municipal Social Insurance Committee that is responsible for the examination of the development plan of endowment insurance, the study and decision of major policies on endowment insurance, and the plan for maintaining or raising the value of endowment insurance fund.

   Article 7 The Municipal Social Insurance Administration is responsible for the administration of endowment insurance of this Municipality. Its functions are:

1. To organize the implementation of endowment insurance system;

2. To prepare the development plan of endowment insurance;

3. To draft local laws and regulations on endowment insurance;

4. To formulate, jointly with relevant departments, the financial, accounting, statistical and internal auditing systems for endowment insurance fund;

5. To supervise the collection of endowment insurance premiums, the disbursement of pensions, and the operation of endowment funds for its appreciation;

6. To direct the work of endowment insurance management centers at the municipal, district and county levels; and

7. To execute the decisions of the Municipal Social Insurance Committee.

   Article 8 Endowment insurance industry management centers are the agencies that undertake the routine business about endowment insurance. Their functions are:

1. To take charge of the collection of endowment insurance premiums and the payment of pensions;

2. To manage individual endowment insurance accounts;

3. To answer inquiries about endowment insurance from units, employees and retirees; and

4. To handle other matters commissioned or authorized by the Municipal Social Insurance Administration.

CHAPTER III PAYMENT OF ENDOWMENT INSURANCE PREMIUMS

   Article 9 All units referred to in Paragraph 1, Article 3 of these Procedures shall register endowment insurance for the units and their employees in the endowment insurance administrative center designated by the Municipal Social Insurance Administration. Newly-established units shall complete the procedures of endowment insurance registration within 1 month from the date of their establishment.

When a unit is divided or merged, goes bankrupt or is shut down, and recruits or dismisses employees (including resignation, unauthorized quit, discharge, and removal), the unit shall, within 1 month, go through the formalities for alteration or cancellation of the endowment insurance registration with the endowment insurance management center that handled the registration.

When registering endowment insurance, the endowment insurance management center shall set endowment insurance codes for units, open individual endowment insurance accounts for employees and issue Endowment Insurance Books.

   Article 10 An employee's individual endowment insurance account shall remain unchanged for life. The Endowment Insurance Book must be used for recording the employee's successive working years before the implementation of these Procedures and the savings amount in his individual endowment insurance account after the implementation of these Procedures, which are the basis for computing pensions granted upon retirement.

When an employee changes his/her work unit, the Endowment Insurance Book must be transferred with the employee accordingly.

   Article 11 Units and employees shall pay monthly endowment insurance premiums within the prescribed time limit. No delay or failure of payment nor underpayment is allowed.

   Article 12 A unit shall pay endowment insurance premium at the rate of 25.5% of the total amount of wages paid to all its employees in the preceding month.

An employee shall pay endowment insurance premiums at the rate of 3% of his/her monthly average wage in the previous year, which is to serve as the payment base. If an employee's monthly average wage in the previous year is over 200% of those of the employees of the whole city in the previous year, the excess above the 200% shall not be included in the base for premium payments. In case the average monthly wage of an employee in the previous year is below 60% of those of the employees in the whole city in the previous year, 60% of the monthly average wages of the employees in the whole city in the previous year shall be used as the payment base.

The same approach must be taken to computing the payment base of endowment insurance premium for units and for employees.

The adjustment of the rates of endowment insurance premium paid by units and employees shall be proposed by the Municipal Social Insurance Administration and reported to the Municipal Social Insurance Committee for decision.

   Article 13 The endowment insurance premiums paid by units shall be entered as expenditures through the following channels:

1. Entered as expenditures before tax for enterprises and institutions that balance their revenue and expenditures by themselves; or

2. Entered as administrative expenses or operating expenses for administrative agencies and institutions with total or differential budget.

   Article 14 The endowment insurance premiums shall be paid in the following ways:

1. A unit shall withhold the endowment insurance premiums to be paid by employees from their monthly wages. The deduction from an employee's wages for endowment insurance premium may be exempt from individual income tax.

2. A unit shall go to the endowment insurance management center at regular time every month to verify the endowment insurance premiums to be paid by the unit and its employees and pay the full amount as verified.

   Article 15 The endowment insurance management center shall settle the savings amount in the individual endowment insurance account each year and issue to each employee a statement of the endowment insurance premiums paid.

   Article 16 The endowment insurance premium to be entered in the individual endowment insurance account shall include:

1. The endowment insurance premium paid by the individual; and

2. The portion of endowment insurance premium paid by the unit, which is to be entered in the individual account;

a. The amount to be entered at certain rates (8% for enterprises and institutions that balance revenue and expenditures by themselves, 10% for administrative agencies and institutions with full budget and 9% for institutions with differential budget) of the employee's individual payment base (not more than 150% of the monthly average wages of the employees in the whole city in the previous year); and

b. The amount to be entered at 5% of the monthly average wages of the employees in the whole city in the previous year.

The portion of the endowment insurance premiums paid by the unit, which is to be entered in the individual account, shall be adjusted in proportion to the rise of the individual payment rate.

   Article 17 All the endowment insurance premiums paid by units must be used for social unified plannings except for the portion entered in the individual endowment insurance account.

   Article 18 The interest on the savings amount entered in the individual endowment insurance account shall be computed at a rate not lower than the bank interest rate for residents' time deposits mature in one year's time in the same period.

   Article 19 The endowment insurance fund shall be channeled to the financial special account under the city treasury for the independent social security fund. The fund shall operate on two separate lines, the line of receipts and that of disbursement, which are to be put under specialized management with the fund earmarked and used exclusively for its specified purpose.

CHAPTER IV ENJOYMENT OF ENDOWMENT INSURANCE TREATMENT

   Article 20 A retiree who is entitled to endowment insurance treatment shall satisfy the following requirements at the same time:

1. The employee has reached the retirement age stipulated by the State or this Municipality;

2. The unit and the employee have paid endowment insurance premiums as stipulated; and

3. The employee employed before the implementation of these Procedures has 10 successive working years (including premium payment years) or the employee employed after the implementation of these Procedures and has paid premiums for fifteen years.

The retiree who meets the above requirements may go through the formalities for drawing pensions with the endowment insurance management center and draw pensions monthly upon verification and determination by the endowment insurance industry management center.

   Article 21 A jobless person who meets the requirement in Section 1 of Article 20 of these Procedures may go through the formalities for drawing monthly pensions with the endowment insurance center.

   Article 22 A person who got employment before the implementation of these Procedures and has been working for more than 5 but less than 10 successive years (including payment years) by the retirement age shall quit working. An employee who has 5 successive working years and is incapacitated by illness or non-working related injury may quit working after being ascertained by the Labor Appraisal Committee as having totally lost working ability.

A person who has quit working for the above reasons is entitled to corresponding pension treatment as stipulated.

   Article 23 A person who got employment before the implementation of these Procedures with less than 5 successive years (including premium payment years) or who got employment after the implementation of these Procedures and has paid premiums with less than 15 payment years may, at the retirement age, apply to the endowment insurance industry management center for the payment of the total savings amount in his/her individual endowment insurance account to be made to him/her and for the termination of his/her endowment insurance at the same time.

   Article 24 The person who meets the pension-drawing requirements may draw pensions for life. When the savings amount in his/her individual endowment insurance account is exhausted, the pension may be paid from the pool of unified social security funds.

   Article 25 After the death of an employee or retiree, the balance of the savings amount in his/her individual endowment insurance account paid by himself/herself may be given in one lump sum to his/her heir determined through legal procedures.

   Article 26 The Municipal Social Insurance Administration may require pensioners to go through the check-up formalities with the endowment insurance industry management center at regular time. The payment of pension may be suspended for failure to complete the check-up formalities.

When a retiree can not go through the check-up formalities because of going abroad, or out of border or for other reasons, he/she must produce a certificate of his/her survival in accordance with relevant provisions of the State.

When a retiree can not draw his/her pension in person because of going abroad or out of border or for other reasons and has to entrust someone else to draw pensions for him/her, a notarized power of attorney shall be presented.

   Article 27 The formula for computing the pension of the person who got employment after the implementation of these Procedures is:

Monthly pension = total savings in individual endowment insurance account/120

   Article 28 The monthly pension the person who got employment before the implementation of these Procedures and retired or quit working before the end of 1995 shall first be computed by the said formula and then augmented with a certain percentage of the individual accumulated payment. The augmentation shall be determined according to the following provisions:

1. The monthly pension shall be augmented with 11% for the person who retired and whose payment years plus his/her successive working years before the implementation of these Procedures are 10 or more years but less than 15 years. On this base, a further increase of every 5 years shall bring in a rise of 1 percentage point accordingly, but the augmentation shall not exceed the limit of 16%.

2. The monthly pension shall be augmented with 2% for the person who retired from an administrative agency or institution and whose payment years plus his/her successive working years before the implementation of these Procedures are 10 or more years but less than 15 years. On this base, an increase of every 5 years shall bring in a rise of 1 percentage point accordingly, but the augmentation shall not exceed the limit of 7%.

3. The monthly pension shall be augmented by 10% for the person who quits working from an enterprise and 1% for the person who quits working from an administrative agency or institution.

The above-mentioned person who reaches retirement age in any month of the year shall pay the premium for 12 months in the current year of his/her retirement and the pension shall be augmented according to the provisions in the preceding Section.

The preferential treatment enjoyed by retired veteran cadres, model workers, senior experts and those who can have an early retirement as stipulated by the State shall be carried out according to the original provisions as before.

   Article 29 The savings amount in the individual endowment insurance account multiplied by a definite coefficient makes the savings amount for the total working years for the person who got employment before the implementation of these Procedures and retires after January 1, 1996. The formula for computing his/her monthly pension is:

Monthly pension = savings amount in individual endowment insurance account x coefficient/120

When the pension computed according to the provision in the preceding Section is lower than the standard computed according to the measure in Article 28 of these Procedures, the measure in Article 28 may be adopted to compute the pension instead.

   Article 30 The savings amount in the individual endowment insurance account must only be used to pay monthly retirement pensions and must not be diverted to any other purposes.

When a pension is paid to an retiree, a corresponding deduction must be made from the savings amount in the individual endowment insurance account according to the proportion of the amount paid by the individual to the amount paid by the unit.

   Article 31 The Municipal Social Insurance Committee shall set the lowest standard of retirement pension. In case the pension drawn by according to the provisions is lower than the lowest standard, the pension may be granted according to the lowest standard.

The lowest standard of pension shall be adjusted with the economic development and the rising consumer price index of local residents.

   Article 32 The retirement pension shall be adjusted every year according to the extent of rise in the local residents' consumer price index in the previous year, which becomes effective on April 1 of the current year. The pension of the person who retires in the current year shall be adjusted the following year. No adjustment is made when the local residents' consumer price index drops from the previous year.

   Article 33 This Municipality shall grant living allowances to retirees from time to time according to the national economic development and the receipts and disbursement of the endowment insurance fund, and with reference to the employees' actual wages. A special living allowance may be granted additionally to retirees in special difficulties.

   Article 34 After the death of a retiree, a funeral allowance, grants for lineal dependents and relief benefits shall be paid according to the relevant provisions of the State and this Municipality.

CHAPTER V USE AND ADMINISTRATION OF ENDOWMENT INSURANCE FUND

   Article 35 The sources of endowment insurance funds shall include:

1. Endowment insurance premiums paid by units and employees;

2. Income from the interest earned by endowment insurance fund;

3. Income from the operation of endowment insurance fund for its appreciation; and

4. Overdue fines collected according to the provisions of these Procedures.

   Article 36 The endowment insurance fund shall be mainly used to pay retirement pensions. When the fund is not enough to make payment, it shall be subsidized by the local finance.

The endowment insurance fund shall be put under the centralized management of the Municipal Social Insurance Administration and be earmarked and used exclusively for its specified purpose and must not be drawn on arbitrarily by any unit or individual.

   Article 37 The payments that can be made from the endowment insurance fund are:

1. Retirement pensions;

2. Funeral allowances, grants for lineal dependents, and relief benefits paid after the death of retirees according to the relevant provisions of the State and this Municipality;

3. The balance of the part attributable to individual payment in the individual endowment insurance account to be given to the legal inheritor(s) of the deceased employee or retiree; and

4. Living allowances granted under Article 33 of these Procedures.

The endowment insurance industry management center may draw a certain percentage of the endowment insurance premiums actually collected as management fees upon approval by the Municipal Social Insurance Committee.

The management fees drawn according to the above Section shall be exempt from taxes or fees.

   Article 38 The endowment insurance fund may be put into operation for its appreciation on condition that the regular payment and its safety are secured, but must not be used to make investment with long recovery period, great risks or of a speculative nature. The increment included in the endowment insurance fund after operation shall be exempt from taxes or fees.

   Article 39 The Municipal Social Insurance Administration shall timely summarize, verify and report the use and management of the endowment insurance fund to the Municipal Social Insurance Committee on regular basis or at the request of the latter.

   Article 40 A budget and final accounts must be made annually for the collection, payment and operation of the endowment insurance fund for its appreciation.

   Article 41 The collection, payment and operation of the endowment insurance fund for its appreciation shall be supervised concurrently by the public finance, and auditing departments and the financial regulatory departments.

   Article 42 The Municipality shall set up the endowment insurance fund supervisory organization, consisting of the governmental department concerned and representatives of the social public, to supervise the collection, payment and management of the endowment insurance fund. The specific measures shall be separately formulated.

CHAPTER VI SETTLEMENT OF DISPUTES AND PUNISHMENT

   Article 43 Disputes between an employee and his/her unit over the payment of endowment insurance premiums or disputes between an employee or retiree or a unit and the endowment insurance management center may be referred to the Municipal Social Insurance Administration for adjudication.

   Article 44 An employee or retiree or a unit may ask the endowment insurance management center to check the payment of endowment insurance premiums made by the individual or the unit and the payment of pensions. The endowment insurance management center shall provide free services.

   Article 45 The endowment insurance management center may examine the payment of endowment insurance premiums. The Municipal Social Insurance Administration shall instruct the unit that makes no payment of, or fails to make of, or makes underpayment of endowment insurance premiums to pay the premiums within a prescribed time limit. If the payment is not made within the deadline, the Municipal Social Insurance Administration may ask the bank to withhold the payment and may impose a fine 1 to 2 times as much as the unpaid amount. The fine, however, shall not exceed 30,000 yuan.

   Article 46 The endowment insurance management center shall impose an overdue fine equal to 0.2% of the payable amount for each day in arrears on the unit that fails to make the payment of endowment insurance on time.

Income from overdue fines shall be included in the endowment insurance fund.

   Article 47 When a retiree who enjoys the endowment insurance treatment dies, his/her lineal relative(s) or the unit concerned shall go through the endowment registration cancellation formalities with the endowment insurance management center in good time.

If any person violates the above Section, overdraws or falsely claims pension by forging documents or by other means, the endowment insurance management center shall recover the amount overdrawn or falsely claimed. If the case is serious, the Municipal Social Insurance Administration may impose a fine one to five times as much as the amount overdrawn or falsely claimed. However, such fine shall not exceed 30,000 yuan for a unit and 1,000 yuan for an individual.

   Article 48 If the party concerned refuses to accept as final the specific administrative act of the Municipal Social Insurance Administration, it may apply for administrative review according to the Regulations on Administrative Review or institute legal proceedings according to the Administrative Litigation Law of the People's Republic of China.

If the party concerned does not apply for review or institute legal proceedings within the prescribed period of time, nor does it comply with the specific administrative decision, the administrative department that made the decision may apply to the people's court for enforcement according to the provisions of the Administrative Procedure Law of the People's Republic of China.

   Article 49 The public security organs shall inflict penalty on those who disturb the normal working order of endowment insurance agencies according to the Regulations of the People's Republic of China on Public Security Administration and the Imposition of Punishment.

CHAPTER VII SUPPLEMENTARY PROVISIONS

   Article 50 The interim measures on endowment insurance for employees in foreign-funded enterprises and the measures on endowment insurance for employees in privately-owned enterprises and individual industrialists and businessmen shall be separately formulated according to the principles of these Procedures.

   Article 51 The procedures on unit supplementary endowment insurance and individual savings endowment insurance in this Municipality shall be separately formulated.

   Article 52 The Municipal Social Insurance Administration shall be responsible for the interpretation of the specific application of these Procedures.

   Article 53 These Procedures shall become effective on June 1, 1994.

Any unit or individual that failed to execute the Plan of Shanghai Municipality for the Implementation of Reform of Endowment Insurance System for Town Employees during the period from January 1, 1993 until the time of implementation of these Procedures shall fulfill the obligations under the Plan within 3 months starting from the date of implementation of these Procedures.