A Comprehensive Guide for Housing Fund Contribution in China – Eligibility, Benefits, Application Process
The Housing Fund Contribution was established in 1999 in China. This policy has a social security framework that helps employees purchase homes, improves housing conditions, and promotes stable employment. Both employers and employees must contribute to this fund every month.
The Key Attributes of the Housing Fund Contribution –
Let’s take a look at the key features of the fund contribution.
The framework of housing fund contribution supports homeownership.
The unemployed and retired urban employees cannot participate in the Fund system. It is only restricted to in-service employees.
The fund contribution comprises two parts – the employee deposits one part of the fund, and the enterprise deposits the other. The enterprise deposit amount and the employer’s contribution are deposited into the housing fund.
The Housing Fund contribution is long-term in nature. The employer must continuously and consistently make the required contribution during employment. In case of retirement or other specified situations, it can be stopped. This framework reflects the uniformity and mandatory nature of the housing fund.
The housing fund is specifically designed for personal housing savings. It has two characteristics –
It is accumulative, meaning it is not a part of the employee’s salary. It can not be distributed in cash. It must be deposited into the particular account the Housing Fund management center at the designated bank opens. This fund contribution is managed separately.
This contribution fund is mainly for housing-related expenses. It involves purchasing, constructing the building, renovating the self-occupied housing or paying rent.
The employees can only withdraw this specific amount when they resign, retire, become fully disabled, change their residence from the original city of residence or terminate their employment status with the employer.
As per the Chinese protocols, all enterprises must contribute to the Housing Fund Contribution, whether state-owned or privately owned.
Advantages of Housing Fund Contribution for both Employees and businesses –
Let’s take a look how both employees and business organizations can enjoy the Housing Fund Contribution –
During the working tenure, the Housing Contribution is contributed by both the employee and employer. The employee contributes a certain percentage of the salary along with the enterprise-specified percentage of the salary.
Both these contributions are directly deposited into the employee’s account. All the deposited money completely belongs to the employee, including interest.
The monthly contribution savings to the housing fund meet your housing expenses. Employees can easily withdraw funds to specified limits and when funding policy allows.
If there is any amount available in your account that has not been withdrawn before retirement. The remaining amount will be settled with interest and can be drawn. It could be called a form of retirement savings.
The housing funds are exempt from personal income tax and interest income tax. It means that one can easily enjoy tax benefits under it.
All the organizations indulged in the contribution fund for housing reflect their commitment to legal compliance and integrity. This helps them avoid legal risks.
The proper contribution of housing funds reflects the organization’s genuine care for employees.
It significantly boosts the harmonious corporate culture and creates a healthy work atmosphere and productivity among the employees.
It helps the organization attract new talent and retain the existing ones for its development.
The employees and the company can enjoy the perks by contributing to the housing fund.
Employees can quickly fulfill their housing dreams along with low-interest loans. On the contrary, the company is fulfilling its social responsibility by laying a solid foundation for future development.
How to Apply for the Housing Fund?
The employees can easily apply for the housing fund through their working organization’s HR or Budgeting and Financial Planning departments. The application procedure involves submitting required documents such as bank account information, employment proof, and identification documents.
Utilization of Housing Fund Contribution –
Employees who enroll in the housing fund scheme can use their contributed funds specifically for housing-related purposes.
One can apply for low-interest housing loans.
One can withdraw funds for down payments or mortgage payments.
One can utilize funds for home renovations and repairs.
How do you calculate the Housing Fund Contribution Ratio?
The contribution ratio depends on your monthly average base salary of last year and its contribution rate. If there is any increase or decrease in the average salary, it will lead to changes in the contribution rate. The contribution rate will change the contribution amount to the housing funds.The deposit base of housing fund contribution is different in all the cities. Thus, the deposit ratio will vary accordingly. If the employee’s earnings are lower than the minimum limit, they will be paid per the minimum standard. If the employee’s earnings exceed the upper limit, they will be paid as per the highest standard.
Conclusion
The Housing Fund Contribution plays a significant role in China. It extensively promotes homeownership, social stability and housing security for the people of China. This comprehensive information will make you understand how this concept works and why it is essential for them. If you seek legal consulting services in China, connect with Innova Legal Consulting. Whether you need legal help for funding, trading or financial planning, trust the experts without any second thought.
