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In order to diversify social security schemes and long-term capital sources for the financial market, the Ministry of Finance has proposed a draft decree on supplementary retirement insurance, specifying eligible participants, premium levels, employees’ entitlements and employers’ responsibilities.
Premium levels would be mutually agreed upon by employers and employees before they enter into fund participation contracts.
Retirement insurance fund management enterprises would make benefit payments to participants based on participation contracts and relevant written agreements between employers and employees.
After signing a supplementary retirement insurance contract, an employee might open an individual retirement account to receive his benefits in monthly installments, in lump sum, or through a combination of both. He might also authorize another person to receive benefits on his behalf.
Employees would be entitled to personal income tax break for their premium payments and benefits received from retirement insurance fund management enterprises.
They might voluntarily suspend or terminate their participation in supplementary retirement insurance under agreements reached with their employers and schemes registered with fund management enterprises.
In addition, employees might maintain their individual retirement accounts when terminating their employment contracts or reaching retirement age. Upon retirement, they would receive a minimum benefit level, which is guaranteed by the retirement fund through annuity insurance contracts.
For employees who have not yet satisfied the conditions for receiving benefits as specified in written agreements, employers may receive refunds from the employees’ individual retirement accounts in proportion to their premium payments, including investment returns and allocated operating expenses.
Employers participating in supplementary retirement insurance would be entitled to corporate income tax incentives for premium payments they have made on behalf of their employees.
Regarding responsibilities, employers would have to fully pay their own premiums as well as any premiums entrusted by their employees, and ensure a clear separation between their own premiums and premium amounts paid on behalf of employees.
- (VLLF)
