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China's Top Legislature Adopts Social Insurance Law
Source: Xinhua News Agency
Source Date: Thursday, October 28, 2010
Country: China
Created: Nov 01, 2010

China's top legislature Thursday voted to adopt a social insurance law that aims to prevent the improper use of social security funds, after reading it four times and receiving feedback on the draft from the general public.

The Social Insurance Law specifies a common right for all citizens to access and enjoy five forms of insurance: basic endowment insurance, basic medical insurance, employment injury insurance, unemployment insurance and maternity insurance.

It also allows employees to transfer their basic endowment insurance accounts from one residence to another and promises a new endowment insurance system for rural residents.

The law overcomes many of the obstacles under the old regulations, which restricted movement of the country's increasing migrant population. It says that a new medical payment system should be established to allow medical insurance in one place to be repaid in another. Citizens should also be allowed to pay pension premiums in one place and withdraw money from another.

In order to prevent the misappropriation of social insurance funds, the law says that the funds' income and expenses, management processes and investment should be made public.

Furthermore, the draft touches on social security information confidentiality issues, and says that social security authorities, executive agencies and personnel cannot disclose insurance information submitted by either employers or employees, adding that violations of such information confidentiality were subject to punishment.

As of 2008, about 219 million Chinese people have been covered by the pension system and about 317 million have basic medical insurance. An additional 124 million have unemployment insurance, 138 million have work injury insurance and 91 million have childbirth insurance, according to government statistics.

The five forms of insurance, co-financed by individuals, employers and the government, have accumulated trillions of yuan deposits.

A social insurance law was first proposed and planned about 16 years ago by the top legislature, which has debated and deliberated on the current draft for three years.

The law, to take effect on July 1, 2011, aims to prevent the improper use of social security funds, and was first submitted to the legislature in December 2007, following a scandal in Shanghai involving 3.7 billion yuan (502.3 million U.S. Dollars) of social security funds.

Social security funds cannot be used to cover government budget deficits, build or renovate government offices or pay government agencies' day-to-day expenditures, according to the law's full text released on Thursday.

Provisions relating to social insurance for foreigners working in China are also included under the new law.

"China's economy and society are becoming more and more open. Such a regulation follows international practice and gives equal national treatment to foreigners working in the country," Hu Xiaoyi, vice minister for human resources and social security, said at a press conference held by the NPC Standing Committee.

Wu Bangguo, chairman of the NPC Standing Committee, said that the Social Insurance Law was a fundamental element in China's socialist legal system, and strengthened the supervision of power of local legislatures on the management of social security funds.

The law's adoption would help improve the social security system in both urban and rural areas, ensure that all citizens enjoy the achievements of the reform and liberalization policy, and build a harmonious society, Wu said.

Premier Wen Jiabao said on Thursday that China had established a social security system covering both urban and rural areas in the past five years.

In a proposal made by the Communist Party of China (CPC) Central Committee on formulating the country's 12th Five-Year Program (2011-2015) on National Economic and Social Development issued Wednesday, the improvement in the social security system would raise the living standards of citizens.

China plans to invest 5.74 trillion yuan by 2020 in building an all-round social welfare system to enhance people's livelihoods, according to the China Development Research Foundation, a government think-tank.
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