Social Security Design Principles

1, the rules of the contribution base calculation formula

Employee social insurance is usually calculated in accordance with the "social security contributions = contribution base × contribution ratio" formula (there are differences in different regions, there are a few types of insurance is charged in accordance with a fixed amount, etc.).

The rules for approving the contribution base are: based on the average monthly salary of the person in the previous year, the upper and lower limits are intercepted (the upper and lower limits are generally determined by a certain percentage of the local social level) for approval.

2, why the contribution does not take the absolute equalization of the reasons

From the bottom of the principle of social security, social security is essentially a kind of old age and sickness and death of everyone related to the risk of protection mechanism. Taking the most typical pension insurance as an example, it is to guard against the risks brought about by unstable and declining incomes in old age (entering an aging society, with longer and longer life expectancy and an increasing proportion of elderly people in the demographic structure, this kind of risk is a big social problem), so it is only possible to cope with it by mandatory accumulations in advance or by relying on intergenerational transfers and other means.

So why can't we absolutely equalize contributions in terms of both inputs (contributions) and benefits (entitlements).

From the input (contribution) point of view, the affordability of people of different economic levels is not the same, and it would be unreasonable to absolutely equalize all contributions. (Fees are different from taxes, but you can refer to the design of the tax mechanism, the design of the absolute equalization of taxes in the history of the design of the early appeared, for example, the ancient "Ding tax", similar to the "poll fee", usually appeared in the era of insufficient levy capacity, although unreasonable, but simple! It is not reasonable, but it is simple and brutal.)

From the point of view of the benefits (treatment), different treatment in different situations also has a certain relative rationality, absolute average is not fair, according to the principle of reciprocity of rights and obligations, "pay more and get more" mechanism in order to form a social justice, stimulate the enthusiasm to participate in the insurance.

3, the social security base is linked to the wage design mechanism

Since the avoidance of absolute equalization of contributions, then what to use as a base? Obviously, wage income will become an important factor. Salary is not only the reflection of the economic ability of the income level in the job, and the salary is the market formation, a true reflection of the labor market supply and demand, as well as geographic industry and other differences, as a benchmark, according to a certain percentage to design contributions, it is relatively scientific.

Based on wages, two more technical designs were adopted: the upper and lower limits, annual approval.

(1) the upper and lower limits are determined in accordance with a certain percentage of the local average social wage, in accordance with the 60th, in principle, the upper limit is 300% of the local social wage, the lower limit is 60% of the local social wage, the practical operation of the country's greater variability in determining the proportion of the method is not the same. The determination of this upper and lower limits, there are several roles: the upper limit is set to avoid the burden of excessive contributions, the lower limit is set to ensure that the minimum total amount of contributions, in addition, this is also conducive to avoiding the polarization of the treatment, the realization of social security of the social ****ji function.

(2) Theoretically, the most reasonable is that it should be charged according to the change of monthly salary income as personal tax, so that it is more accurate. But each person's monthly salary income changes too much, social security contributions and is to take the declaration system, supervision is very difficult, itself "fee" collection capacity than "tax" or lack of, monthly changes will also bring frequent operation to the enterprise trouble. Therefore, for the old employees, the average monthly salary of the previous year to approve, once approved in the next annual cycle. This method is a simplification of the operation, stretched to the annual average, is conducive to ironing out the fluctuations; time lag to the next cycle to use, there is a certain time period, but also to simplify the operating costs.