Policy Interpretation: How big is the impact of the increase in the social security contribution base?

Abstract Netizen: Recently, some cities have raised the base of social insurance contributions. Social security contributions are raised based on the average social wage. Does it increase the cost pressure of enterprises? How is the payment base determined? To what extent will it affect companies and employees? Reporter: Relevant person in charge of the Ministry of Human Resources and Social Security...
Netizen: Recently, some cities have raised the social insurance contribution base. Social security contributions are raised based on the average social wage. Does it increase the cost pressure of enterprises? How is the payment base determined? To what extent will it affect companies and employees?
Reporter : The relevant person in charge of the Ministry of Human Resources and Social Security introduced in an interview that the Social Insurance Law stipulates that the base for paying social insurance premiums by employers is the total wages of employees of the unit. The base of the employee's contribution is his own salary. In actual operation, my salary generally refers to my monthly average salary. However, when my monthly average salary is lower than the local average monthly salary of 60%, the average monthly salary of local employees is 60%; if the average salary of local employees is 300%, the monthly average salary of local employees is 300%, exceeding Part of it is not recorded in the base of the contribution salary, nor is it recorded in the base of the pension.
This means that most employees pay social insurance premiums based on their own wages. Only a small number of employees with low incomes and a few employees with high incomes are not paid by themselves. Assume that the average wage of a certain society is 3,000 yuan, 60% is 1,800 yuan, and 300% is 9,000 yuan. Then employees with local wages below 1,800 yuan and employees with wages above 9,000 yuan are not based on their own wages. Previous calculations show that 60% of the average social wage is what most workers can achieve in a place. In particular, in recent years, the phenomenon of “difficulties in recruiting workers” has emerged. The wage growth rate of migrant workers and other groups with lower wage levels has maintained a relatively fast level. Therefore, most employees who participate in employee pension insurance pay social security in accordance with their actual wages.
However, for a small number of small-employee employees with low wages and slow wage increases, the impact of the increase in the payment base does exist. A company in Zhengzhou has settled the account. In 2015, the local minimum wage standard reached 1,600 yuan, and the minimum social security payment base reached 2,464 yuan. An employee in the enterprise who has a minimum wage level is required to pay an average of 380 yuan for five insurance and one gold, which is higher than his own salary. The feeling of the employees of the enterprise is that "I have not raised my salary, but the payment has increased much."
Why do employees with low wages pay at a base higher than their salary, and those with higher wages must pay at a base lower than their salary? According to reports, this is mainly to consider the treatment of the insured after retirement. Social insurance itself has the function of regulating the income gap and promoting fairness, and the pension treatment should not be too different. After the lower limit and the upper limit of the payment are stipulated, if the insured person reaches the retirement age, if his contribution salary is lower than the average salary of the employee for a long time, the pension level is still low, but his personal actual replacement rate (retirement at retirement) The ratio of the level of gold received to the salary income before retirement will be higher than the target replacement rate of the whole system; if the contribution wage is higher than the average salary of the employee for a long time, the absolute level of the pension is higher, but the actual personal replacement rate will be lower. Target replacement rate.
Since last year, China has continuously lowered the social insurance rate, enabling enterprises to go light. Some experts believe that in the future, the average wage referenced by the payment should better reflect the actual situation of the income of all employed persons, so that they are closer to the real ability to pay.

Related reading: Social security provident fund adjustment in July
With the adjustment of the monthly average wages of the employees in the provinces and cities, the upper and lower limits of the social security fees and the contribution of the provident fund in July have been adjusted, and the wages of the employees have changed.
The reporter calculated an account and found that the change in the base of payment will have a greater impact on high-income people. The maximum deposit ratio of the provident fund has been reduced from 20% to 12%, which is a significant increase in wages.

Background: The “five insurance” contribution base is determined by the tax return in the upper and lower limits.
According to the current policy, among the five social insurance types, individuals need to pay for pension insurance, medical insurance and unemployment insurance. Within the upper and lower limits, the employer declares the payment base of the employee according to the monthly average of the salary and salary of the employee’s personal tax in the previous year.
What is the upper and lower limits? Each type of insurance is different.
The upper limit of the payment base of pension insurance is 300% of the average monthly salary of employees in the province last year. The lower limit is 60% of the average weight of the average wage of employees in the province last year and the average wage of employees in urban private sector. The upper and lower limits of the medical insurance payment base are 300% and 60% of the average monthly salary of employees in Guangzhou in the previous year. The upper limit of the payment base for unemployment insurance is 300% of the average monthly salary of employees in Guangzhou in the previous year, and the lower limit is the minimum wage for the city in Guangzhou.
According to the figures released by the statistics department, the average monthly salary of employees in Guangdong Province in 2015 was 5,525 yuan, and the average monthly salary of employees in Guangzhou in 2015 was 6,764 yuan.

Adjustment: There is a big change in the upper and lower limits of the “five insurance and one gold” payment base.
According to the “2016 Social Security Fees Payment Bases Comparison Table” issued by the Guangzhou Municipal Local Taxation Bureau and the relevant data of the previous year, it can be seen that from July 2016 to June 2017, the maximum base for the payment of pensions for employees in Guangzhou is 14958 yuan. As high as 16,575 yuan, the lower limit remains at 2,408 yuan (tentatively, pending provincial documents). The upper limit of the employee medical insurance payment base was raised from 18,561 yuan to 20,292 yuan, and the lower limit was raised from 3,712 yuan to 40,58 yuan. The upper limit of the unemployment insurance contribution base is raised from 18,561 yuan to 20,292 yuan, and the lower limit is maintained at 1,895 yuan (the minimum wage is not adjusted).
According to the release of the Guangzhou Housing Provident Fund Management Center, the deposit base limit and the deposit ratio of the provident fund have also changed. After July, the ceiling for the contribution of the provident fund was raised from 30,935 yuan to 33,820 yuan, and the lower limit was maintained at 1,895 yuan. The ceiling for deposits is reduced from 20% to 12%. According to the supply-side structural reform plan of Guangdong Province, the ceiling for the contribution of the provident fund has been reduced from five times the monthly average wage to three times. However, the notice issued by the Guangzhou Housing Provident Fund Management Center on July 1 has not been rigidly regulated. It is only stipulated that if the monthly average wage of a worker with a good economic benefit is higher than 20,292 yuan, the deposit base of the employee may be declared on a temporary basis, but the maximum shall not exceed 5 times, that is, 33,820 yuan.

The upper and lower limits of the payment base mainly affect higher income earners
The reporter found that the adjustment of the upper and lower limits of the contribution (storage) base has a greater impact on the after-tax wages of the higher-income people, and the maximum contribution ratio of the provident fund from 20% to 12% is a substantial increase in wages. However, it is worth noting that social insurance personal contributions will generally enter personal accounts, and the personal deposit amount of the provident fund is also under their own account. The change in the amount of payment is equivalent to the movement of the left and right pockets.
Note: In the calculations below, for the simple treatment, the above examples ignore the payment of medical subsidies for major diseases and supplementary medical insurance. The unemployment insurance rate adjustment time is March of this year. In the example, “before and after adjustment” refers to the situation in July 2015 and July 2016 respectively.

Example of post-adjustment of high-income people:
Example 1: Assume a salary of 19,000 yuan, 12% of the contribution of the provident fund
Before the adjustment, the individual contributions of the five insurances and one gold = 14958 × 8% + 18561 × 2% + 18561 × 0.5% + 18561 × 12% = 3820.665 yuan, the individual tax is about 1914.83 yuan, and the after-tax wage is about 13264.50 yuan.
After the adjustment, the adjusted five insurance and one gold personal contribution = 16575 × 8% + 19,000 × 2% + 19,000 × 0.2% + 19,000 × 12% = 4024 yuan, the individual tax is 1864 yuan, the post-tax wage is 13112 yuan.
That is to say, after the adjustment, the wages of the employees are reduced by about 152.5 yuan before the adjustment.
Example 2: Assume a salary of 19,000 yuan, 20% of the contribution of the provident fund
Before the adjustment, the five insurance and one gold personal contribution = 14958 × 8% + 18561 × 2% + 18561 × 0.5% + 18561 × 20% = 5372.865 yuan, because the contribution of more than 12% of the deposit is subject to tax, so the above tax exemption The part is 3,826.665 yuan. The tax is about 1914.83 yuan, and the wage after tax is about 11712.30 yuan.
After the adjustment, the five insurance and one gold personal contribution = 16575 × 8% + 19 × 2% + 19,000 × 0.2% + 19,000 × 12% = 4024 yuan, a tax of 1864 yuan, after the tax, the salary is 13112 yuan.
After the adjustment, the salary increased by nearly 1399.7 yuan before the adjustment.

Example of post-adjustment situation for low-income people:
Example 3: Assume a salary of 2,408 yuan, 12% of the contribution of the provident fund
Before the adjustment, the five insurance and one gold personal contribution = 2408 × 8% + 3712 × 2% + 3712 × 0.5% + 2408 × 12% = 563.264 yuan, due to the cost deduction of 3,500 yuan, the tax should be paid as 0. The wage after tax is 1844.736 yuan.
After the adjustment, the five insurance and one gold personal contribution = 2408 × 8% + 4058 × 2% + 4058 × 0.2% + 2408 × 12% = 570.876 yuan, a tax of 0. The wage after tax is 1837.124 yuan.
After the adjustment, the salary was reduced by 7.612 yuan before the adjustment.
Example 4: Assume a salary of 2,408 yuan, a contribution of 20% of the provident fund
Before the adjustment, the five insurance and one gold personal contribution = 2408 × 8% + 3712 × 2% + 3712 × 0.5% + 2408 × 20% = 767.04 yuan. The tax is 0. The wage after tax is 1,640.96 yuan.
After the adjustment, the five insurance and one gold personal contribution = 2408 × 8% + 4058 × 2% + 4058 × 0.2% + 2408 × 12% = 570.876 yuan, a tax of 0. The wage after tax is 1837.124 yuan.
After the adjustment, the salary of this person increased by 196.164 yuan before the adjustment.


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