Implementation of "Measures for Enterprise Annuities"
Since the PRC issued Tentative Measures for Enterprise Annuities in 2004, the number of enterprises adopting enterprise annuities has increased significantly, reaching 76,000 by the end of 2016. On 18 December 2017, the Chinese Ministry of Human Resources and Social Security ("MOHRSS") and the Ministry of Finance issued new Measures for Enterprise Annuities which came into effect on 1 February 2018.
The main differences between the new measures and 2004's tentative measures are as follows:
Under the new measures, annuity contributions paid by an enterprise must not exceed 8% of the enterprise's total annual payroll figure. This cap was set at 8.33% in the tentative measures. The total aggregate annuity contributions paid by an enterprise and its employees may not exceed 12% of the total annual payroll figure, as against 16.67% in the tentative measures.
The new measures stipulate that any contribution made by an enterprise to an individual employee's annuity account in the current month should not be more than five times the average allocation for that period.
The new measures state that, upon consultation, an enterprise and its employees may amend an enterprise annuity plan to better suit the circumstances of the enterprise, subject to state policies. The amended enterprise annuity plan should be submitted to the employee representatives' assembly or to all of the employees, for discussion and adoption, and then filed with the administrative department of human resources and social security.
If an enterprise is dissolved, declared bankrupt, a force majeure event happens or any other termination circumstances stipulated in the enterprise annuity plan occur, the enterprise annuity plan should be terminated.
Furthermore, if an enterprise cannot continue to make contributions for a particular period due to operating losses, reorganisation, mergers and acquisitions or other reasons arising after the implementation of the enterprise annuity plan, the enterprise may suspend annuity contributions upon consultation with its employees. Once the issue is resolved or the process completed, the enterprise and employees can resume making annuity contributions and may, if the financial health of the enterprise allows, make supplementary contributions to make up for the contributions not made to the enterprise annuity plan during the period of suspension. The amount of supplementary contributions and the period for which they are made should not exceed the term and amount of actual suspended contributions.
The new measures provide that contributions made by an employee to his/her individual annuity account and the returns on investment of such contributions should be the property of the employee from the outset.
As regards contributions made by an enterprise to an employee's individual annuity account and the returns on investment of those contributions, the enterprise and the employee may agree that such contributions and returns be the property of the employee from the outset. Alternatively, contributions and related returns on investment can be gradually transferred to an employee during his/her employment, provided that all contributions and related returns on investment should be completely transferred to the employee after no more than eight years.
The new measures state that an employee who has completely lost his/her capacity to work can also receive enterprise annuities. This contrasts with the tentative measures under which only an employee who has reached the State prescribed retirement age can receive enterprise annuities.
The new measures stipulate that a qualified employee may make withdrawals from his/her individual annuity account on a monthly basis, either in instalments or a lump sum, or may use some or all of his/her savings to purchase commercial pension insurance products.
The tentative measures stipulate that only an enterprise can adopt the enterprise annuity system and that this may be on a voluntary basis. By contrast, under the new measures, all employers, other than enterprises and their employees who participate in the basic endowment insurance scheme, can adopt the annuity systems provided for. This means, for example, that individual businesses will now be able to contribute to an enterprise annuity scheme.
Implementation of "Measures for Implementing the Visa System for Foreign Talent"
In November 2017, the State Administration of Foreign Experts Affairs ("SAFEA"), the Ministry of Foreign Affairs ("MFA") and the Ministry of Public Security ("MPS") jointly issued Measures for Implementing the Visa System for Foreign Talent. Following its promulgation, several provinces and cities, such as Beijing, Shanghai and Guangdong, have begun implementing the Visa System. Under the new measures, foreign nationals who wish to live and work in China in the capacity of "foreign talent" need to apply for the "R" class visa.
The procedure for applying for a foreign talent visa is broadly as follows:
The implementation of these measures makes the procedure for applying for the "R" class visa for foreign talent clearer and more explicit and should help to encourage the introduction of foreign talent to China.
Jun 08 2023