No change to housing fund contribution limits

By Cao Qian  |   2008-6-25  |     NEWSPAPER EDITION

PEOPLE covered by the city's housing fund program will continue to pay a maximum 7 percent of their monthly salary to the fund in the coming year, Shanghai Provident Fund Management Center said yesterday.

This means an earlier proposal to allow people to pay a higher percentage of their monthly salary to the local housing fund program amid soaring home prices did not win approval from the local housing fund administrative commission as well as the municipality.

Earlier, the center was considering raising the proportion from the current 7 percent to 8 percent as the 7 percent was set early in 1999 and might not be able to keep up with fast growing housing prices.

Officials from the center explained that the reason why the proportion will not be increased in the year from July 2008 to June 2009 is to avoid burdening employers financially.

At the moment, people covered by the city's housing fund program are allowed to pay between 5 percent and 7 percent of their monthly salaries to the center and their employers are required to match the amount their workers contribute. Countrywide, a minimum 5 percent and a maximum 12 percent has been set.

In Shanghai, for those with larger provident fund accounts, an extra 1 percent to 8 percent of a monthly salary can be added - this is probably another reason why Shanghai has decided to maintain its current level of 7 percent, officials said.

"There are no such large provident fund accounts in other cities such as Beijing, where the proportion has recently been raised to a maximum 12 percent," said Cong Cheng, an official with the center.

"Therefore, in our city where such larger accounts are already available, a further increase of the basic proportion might allow those well paid people to benefit too much and it could be unfair to low income earners."

About 8.8 percent of people covered by the program in the city are benefiting from larger accounts, according to the center. The city may consider an increase of the proportion after these larger provident fund accounts are revoked, Cong added.