The State Council recently issued the Notice on Establishing the Central Adjustment System of the Basic Old-age Insurance Fund for Enterprise Employees (hereinafter referred to as the Notice), and decided to establish the central adjustment system of the old-age insurance fund, which will be implemented from July 18, 2008.

The "Notice" clarifies that the main content of establishing a central adjustment system for endowment insurance funds is to establish a central adjustment fund for endowment insurance on the basis of the current provincial-level overall planning of basic endowment insurance for enterprise employees, and appropriately adjust the endowment insurance funds in each province to ensure that basic pensions are paid in full and on time.

First, the central adjustment fund consists of funds from provincial endowment insurance funds. According to 90% of the average wage of employees in each province and the number of employees who should be insured on the job as the base, the settlement ratio will gradually increase from 3%.

Second, the central adjustment fund will be allocated to local governments according to the per capita quota allocation method.

Third, the central adjustment fund is included in the financial special account of the central social security fund, and the management of revenue and expenditure is carried out separately, which is earmarked for special purposes and may not be used to balance the financial budget.

Fourth, the current central financial subsidy policy and subsidy methods remain unchanged, and provincial governments should earnestly assume the main responsibility of ensuring that basic pensions are paid in full and on time and making up for the gap in the endowment insurance fund.