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Original title: the housing provident fund cannot be canceled, it must expand coverage and maintain the equity of the system
Words of a family
The core of the reform of the housing provident fund system includes two aspects: one is to solve the problem of “with and without”, to further expand coverage, so that more employees can enjoy the dividend of the system. The other is the “ups and downs” question. We must uphold the basic principle of “raise low and limit high” to keep the system fair.
The issue of abolishing the housing provident fund system has been the subject of extensive debate. Recently, the Minister of Housing and Urban-Rural Development Wang Menghui issued a public response in the “People’s Daily” stating that the housing provident fund system should be reformed and improved. Expand the scope of deposits to cover new groups of citizens. Optimize the policy of use and provide financial support for the development of rental housing and the transformation of old urban communities. Further strengthen the construction of information on the management of housing provident funds and improve the level of supervision services.
Obviously, the housing provident fund system will not be abolished, but it will be reformed and further improved.
China’s housing provident fund system was established in the 1990s. With the advancement of housing market reforms, the coverage and scale of deposits of housing provident funds have expanded rapidly. According to the “Annual Report of the National Housing Provident Fund 2019” issued jointly by the Ministry of Housing and Urban-Rural Development, the Ministry of Finance and the People’s Bank of China, the payment of the Housing Provident Fund in that year amounted to 2,370,967 million yuan, and the year-end payment and deposit balance was 65,372,243 million yuan, and the fund balance was 946,152 billion yuan. Throughout the year, the units paid for the housing provident fund were 3,224 million and the salaried employees were 148,813,800, an increase of 10.57% and 3.08% respectively compared to the previous year.
In essence, the Housing Provident Fund is a policy-based, self-help social housing social security system that leads to raising and financing housing funds, thereby enhancing the ability of employees to purchase commercial housing. However, in practice, due to the imperfection of the system and the deviations in the implementation process, many people have questioned the mutual assistance and fairness of the housing provident fund. For example, some people believe that the housing provident fund system was introduced in Singapore in the early 1990s. Now our real estate has already been commercialized and commercial banks have become the main lending agency for the House. The existence of a provident fund for housing is of little importance. It can be canceled. Directly reduce the cost of companies and employees by 12%. There are also opinions that because the coverage of the housing provident fund is not large enough, only a few people have benefited and it has become one of the sources of widening the income distribution gap.
Obviously, there are certain problems and loopholes in the housing provident fund system, which are all objective. However, it cannot be concluded from this that the housing provident fund should be canceled. On the one hand, as a home security measure with strong mutual assistance, it is a security policy that is widely adopted by most countries and has proven to be effective in practice. Housing is the basic livelihood of the people, and securing the basic livelihood needs of the people through certain institutional arrangements is an important part of a country’s social security system. On the other hand, the housing provident fund plays a very active role in protecting people’s basic housing needs. In 2019, a total of 2,860,400 personal loans for housing were issued and 56,485 million people withdrew; and 10.1382 million people received support to withdraw housing provident funds for housing leases for 93.783 million yuan, and the number of supporters increased by 32.28% over the previous year. Obviously, the housing provident fund plays a very active role in helping people realize their “dream of housing”. Not only that, according to the design of the housing provident fund, the provident fund is jointly funded by the unit and the employees, but the funds deposited belong to the personal account, which is equivalent to the one-to-one compensation of the drive and benefits to the individual.
Of course, the housing provident fund system still needs reform. The core includes two aspects: one is the problem of “being and not having”, which is to further expand coverage so that more employees can enjoy the dividend of the system. In particular, the non-public economy accounts for more than 95% of the total number of companies in the country, but only about half of all companies that pay provident funds. The other is the “ups and downs” question. We must uphold the basic principle of “raise low and limit high” to keep the system fair. Efforts should be made to create the conditions for companies to increase the share of provident funds to employees and to resolutely curb the behavior of some companies, especially monopoly companies, which exceed the standard pay. Only in this way can the guarantee function of the housing provident fund be fully exploited, and the dispute over its retention and abolition will naturally end.
□ Li Changan (Professor at the National Opening Institute, University of International Business and Economics)
