Amendments to Shanghai Housing Provident Fund affects monthly salaries beginning 1 April


Monthly contribution changes to the Shanghai Housing Provident Fund will come into effect from 1 April 2019. On 14 February 2019, the Shanghai Municipal Housing Management Committee of Housing Provident Fund published online The Notice on the Amendment to Shanghai Housing Provident Fund on Payment Basis, Payment and Deposit Proportion and Maximum and Minimum Monthly Payment (Notice) effective from 1 April 2019.

State Council’s Regulations on Housing Provident Fund Administration and Provisions of Shanghai Municipality on Housing Provident Fund Administration

Established nationwide in 1991, the Housing Provident Fund is designed to assists employees in saving money for the purchase of housing property. Although the Housing Provident Fund is national legislation, local governments are authorised to establish contribution rates.

The way the fund operates is that both an employee and employer are required to make monthly contributions to the housing payment; for the employee, the payment is usually deducted from their monthly salary and indicated in the monthly payment slip.

The payment for the employee is calculated based on their average monthly salary from the previous year multiplied by the payment and deposit rate of the housing provident fund of staff and workers; the employer’s payment is calculated on the monthly salary average from the previous year multiplied by the payment and deposit rate of the housing unit.  

Under the Notice, the payment shall be adjusted from the average monthly salary in 2017 to the average monthly salary in 2018 from 1 April 2019. For both employer and employee, the payment and deposit proportion are adjusted to 5%-7% and the payment and deposit proportion for supplementary housing provident fund deposit is adjusted to 1%-5%.

Employees may choose the actual percentage to be applied in the calculations. However, no change to the percentage may be made afterwards during the same year. As a result, the employee’s monthly contribution will be affected and dependent upon the actual percentage applied in the calculation.

Below we provide an example.

Company A
The average monthly salary of a person in Company A in 2018 was RMB 10,000. Given this, Company A, as the employer, applies 5% as the housing payment and deposit proportion, which results in a RMB 500 monthly deduction from the monthly salary as the employee’s contribution and puts forth RMB 500 as the company’s contribution.

Company B
The average monthly salary of a person in Company B in 2018 was RMB 10,000. Given this, Company B applies 7% as the housing payment and deposit proportion, which results in a RMB 700 monthly deduction from the monthly salary as the employee’s contribution and puts forth RMB 700 as the company’s contribution.

The payment basis of the housing provident fund, as well as the payment basis of the supplementary housing provident fund, shall not exceed three times Shanghai’s average monthly salary in 2018, and shall not decrease less than Shanghai’s minimum monthly standard salary for 2018. Maximum and minimum monthly payment basis’ shall be publicly announced on 1 April 2019. What’s more, from 1 April 2019, companies may register and proceed with the payment adjustment procedures online utilising the website www.shgjj.com.

Employees should be aware of changes in their salary based on the Housing Provident Fund update from 1 April 2019, Employees or employers who find with questions and concerns about the process should seek professional advice.

If you would like more information about the Housing Provident Fund in China or other related corporate matters, send us an email at talktous@horizons-advisory.com, and we’ll have a Horizons professional contact you.

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