Decisions of the State Council on Modifying the Basic Endowment Insurance System for Enterprise Employees

Decisions of the State Council on Modifying the Basic Endowment Insurance System for Enterprise Employees

Guo Fa [2005] No. 38

December 3, 2005

People's governments of all provinces, autonomous regions and municipalities directly under the Central Government, all ministries and commissions under the State Council and all agencies directly under the State Council:

In recent years, all regions and related authorities have been making efforts to expand the coverage of basic endowment insurance, strengthen the collection and payment of basic endowment insurance fund and actively promote the socialized management and service for enterprise retirees in accordance with the deployment and requirements of the Party Central Committee and the State Council on modifying the basic endowment insurance system for enterprise employees and for the purpose that the retirees will have their basic pensions in full and on time. Obvious results and effects have been achieved in all tasks, which have been playing an important role in promoting the reforms and development and maintaining social stabilities. However, with the aging of the population, the diversification of means of employment, and the development of urbanization, problems still exist in the current basic endowment insurance system for enterprise employees, such as the fact that the individual accounts fail to be fully adopted, the fact that the calculation and distribution measures are not reasonable enough, and the fact that the coverage is not extensive enough, which require reforms and modifications. Therefore, on the basis of sufficient investigation and research as well as the summary of the pilot experiences of the three provinces in Northeast China in modifying their urban social security system, the State Council has made the following decisions on modifying the basic endowment insurance system for enterprise employees:

Article 1 The guidelines and major tasks for modifying the basic endowment insurance system for enterprise employees. We shall be guided by the Deng Xiaoping Theory and the important thoughts of "Three Represents" , conscientiously implement the spirit of the Sixteenth Party Congress and the Third, Fourth and Fifth Plenary Sessions of the Sixteenth Central Committee of the Communist Party of China, follow the requirements for applying the Scientific Outlook on Development and constructing a harmonious socialist society, consider relations between the current situation and the long-term prospect as a whole, stick to the principle of extensive coverage, appropriate standard, reasonable structure and balanced fund, modify the policies, improve the mechanisms and strengthen the management, so as to establish a basic endowment insurance system for enterprise employees, which will meet the national conditions of China and realize the sustainable development. The main tasks are as follows: ensure that the basic pensions are distributed on schedule and in full and guarantee the basic life of the retired; gradually fully adopt the individual accounts and modify the basic system which combines the overall social planning and personal accounts together; standardize the participation and payment policies for urban individual business entities and flexibly employed individuals in the insurance system, and extend the scope of coverage; reform the calculation and distribution measures of basic pensions and establish an incentive and constraining mechanism for the insurance participation and payment; determine a reasonable basic pension standard according to the level of economic development and the bearing capacity of various aspects; establish a multiple-level endowment insurance system and clarify the responsibilities of the central government, local governments, enterprises and individuals; strengthen the collection and supervision of basic endowment insurance funds, and modify the multiple-channel financing mechanism; further improve the socialized management of the retired and enhance the level of services.

Article 2 Ensure that basic pensions are paid on schedule and in full.
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