China Draft Law to Safeguard Operation of Social Security System IMCS China Social Security Jack Wu

Parts of China Social Security According to the draft law, China's social security system was composed of five parts: pension insurance, medical insurance, work injury insurance, unemployment insurance and maternity insurance.

Current Coverage China had established its social security system at a preliminary stage. By the end of September 2007, 197 million Chinese had been insured for pension insurance, 115 million for unemployment insurance, 189 million for medical insurance, 115 million for work injury insurance and 73 million for maternity insurance, according to the Ministry of Labour and Social Security(MLSS).

Major Problem However, these different kinds of insurance were regulated according to different regulations or polices. China lacked in a comprehensive law to regulate its social security system and safeguard the management and operation of the social security system. Currently, some employers had refused to insure their employees or deliberately defaulted paying insurance fees for their staff for lack of clear punishment. Meanwhile, an incomplete social security system also hindered rational migration of labor, the MLSS said.

Draft Law The draft law, with eight chapters and 63 provisions, outlined the legal framework for the social security system and specified principle, scope, prerequisites, management and supervision of the social security system.

Coverage by Law According to the law, the pension and unemployment insurance would cover all full-time employees, excluding public servants; the medical insurance would cover all employees; work injury and maternity insurance would cover all employees, excluding public servants.

Violation Punishment The draft law also detailed stated punishments on those who violated it. With the social security administrations approval, institutions in charge of fee collecting could directly transfer fees from the employer's bank accounts if it failed to pay enough insurance for its employees, the draft law said. It stated the institutions in charge of fee collecting could even make an application to a court to confiscate and sell the property of serious violators so as to compensate insurance fees.

Safeguard Fund It said government at the county level should establish supervision systems to safeguard the secure and efficient operation of the fund. It also said those who fabricated documents to swindle the social security fund must return the funds and be fined twice or five times the amount they swindled.

Safeguard Fund: continued The draft law stipulated that all social security funds should be used for specified purposes only. No institutions or persons had the right to occupy or embezzle from the fund. If the security fund was embezzled, the social security administration departments, financial departments and audit offices should recover the embezzled funds; illegal income earned from embezzled social security funds should be confiscated and personnel involved would be punished according to law.

Safeguard Fund: continued To make management of the fund more transparent, the draft law asked institutions in charge of social security cases to disclose income, expenditure, surplus and profit of the fund regularly. It also said that individual's Identification Card number will be registered as the insurant's social security number. Public security organs should inform the insurance fee collector with insurant's status such as birth, death and residence information, the draft bill said.