The state has made a final decision, and the new policy has been implemented, benefiting 170 million people

New Talks on Real Estate

2024-04-17 07:00Published in Henan

In the process of job hunting, many job seekers hope to find a company that offers five insurances and one housing fund. The so-called five insurances cover endowment, medical care, unemployment, maternity and work-related injury insurance, while the "one housing fund" refers to the housing provident fund. The original intention of the establishment of the housing provident fund is to alleviate the housing pressure of employees. Its importance has become even more prominent against the backdrop of rising housing prices and commercial loan rates. However, some enterprises consider that paying the housing provident fund for their employees will increase the cost of operation, so they only provide five insurances and avoid the payment of the housing provident fund. This makes many job seekers think that only a position that provides five insurances and one housing fund can be regarded as a real benefit.

There are also concerns that contributing to the housing provident fund will lead to a decrease in real income. But in fact, the housing provident fund is a long-term accumulation of funds for the employees themselves. It has a wide range of uses, such as buying a house, you can use the provident fund to make a loan, and its interest rate is only 3.25%. The maximum loan amount for an individual is 500,000 yuan, and if both husband and wife have provident fund, the maximum loan amount is 1 million yuan. Compared with commercial loans, CPF loans undoubtedly greatly reduce the cost of buying a home, and can save a lot of interest expenses for home buyers over the term of 30 years.

In addition, the funds in the CPF account can also be used for monthly mortgage repayments, thus further reducing the mortgage pressure of employees. Even if there is no need to buy a house for the time being, the CPF can be used to pay rent. Therefore, although the payment of the housing provident fund seems to reduce the current income, in fact, because the enterprise also pays a part for the employees, this increases the overall income level of the employees to a certain extent.

In recent years, there has been a growing call for the abolition of the housing provident fund system, and the well-known economist Huang Qifan has put forward this proposition, aiming to reduce the burden on enterprises. Huang Qifan pointed out that with the increasing maturity and commercialization of the mainland real estate market, most home buyers have turned to commercial loans, and the influence of the housing provident fund is not as good as before, and its existence value has declined. However, for many enterprises, the housing provident fund has become a heavy burden. The abolition of this system is expected to save companies 6% to 12% of operating costs, and the actual income of employees is expected to increase significantly.

Not only Huang Qifan, but also Dong Mingzhu, chairman of Gree Electric Appliances, also expressed support for the abolition of the housing provident fund in an interview. She believes that companies like Gree may provide housing for their employees in the future, making the housing provident fund redundant. In addition, Lou Jiwei, former Minister of Finance, also publicly expressed his approval of the abolition of the housing provident fund. Abolishing the housing provident fund system can not only bring substantial burden reduction to enterprises, but also help to increase the actual income of employees. With the continuous development and change of the real estate market, we may need to re-examine the meaning of the existence of this system to adapt to the new market environment and social needs.

Is the housing provident fund really useless and should be abolished? However, in the author's opinion, the answer is not. In fact, in the face of high housing prices, the importance of housing accumulation is becoming more and more prominent. Its use goes far beyond home loans, including paying off mortgages, renting homes, home improvements, dealing with critical illnesses, and even supplementing pensions.

Economists have spoken out that the abolition of the housing provident fund will cause injustice to the majority of workers, their interests will be seriously damaged, and enterprises may become the only beneficiaries. As netizens said, not all companies can follow Gree's example and solve housing problems for employees. In most companies, employees are still self-reliant and need to buy their own housing.

Zheng Bingwen, director of the Chinese Academy of Social Sciences, also said that although there are some problems with the housing provident fund, simply abolishing it will damage the rights and interests of ordinary workers and reduce their quality of life. On the contrary, we should actively promote the reform and improvement of the housing provident fund system, rather than blindly abolishing it.

The state has not given a clear answer on whether to cancel the housing provident fund. However, judging from the latest policy launched by the Ministry of Housing and Urban-Rural Development - promoting the non-local loan business, this seems to send a signal: the housing provident fund system will not be abolished, but reformed. This policy is expected to benefit 170 million employees who pay into the housing provident fund, further demonstrating the importance and necessity of its existence.

Among the voices calling for the abolition of the housing provident fund, there is no lack of participation of ordinary workers. They argue that CPF contributions do not bring tangible benefits, and instead prefer to increase wages directly in the form of cash. The emergence of this concept is largely due to the geographical restrictions of the housing provident fund - no loans can be made in other places. The core value of the housing provident fund is to support the purchase of a house and the repayment of the mortgage, but the reality is that not everyone will choose to buy a house in the city where they work, some people want to buy but cannot afford it, and some people choose to buy a house in a different place for various reasons.

In the case of Beipiao, most of them could not afford to buy a house in the bustling city of Beijing, and eventually chose to return to their hometown to buy a house. However, the housing provident fund they paid in Beijing does not play its due role in their hometown, and they still need to take the route of commercial loans, which undoubtedly increases their financial pressure.

The Ministry of Housing and Urban-Rural Development's new regulations on the housing provident fund are precisely to break this geographical restriction and realize the non-local loan function of the provident fund. This change is undoubtedly a boon for remote workers, whose CPF will no longer be a dead letter, but a powerful tool to support them in buying a home.

It is worth mentioning that provident fund off-site loans have been implemented in some areas. Sichuan Province and Chongqing Municipality have established seven mechanisms, including mutual recognition and mutual loan of provident funds. In the Yangtze River Delta region, several provinces and cities have also signed provident fund integration agreements. In addition, a total of 20 cities in the urban agglomeration in the middle reaches of the Yangtze River have signed the "Cooperation Convention on Housing Provident Fund Management Centers in the Urban Agglomeration in the Middle Reaches of the Yangtze River", realizing the mutual recognition of provident funds and non-local loan business. As the Ministry of Housing and Urban-Rural Development continues to promote the policy of non-local loans, we have reason to believe that more and more cities and provinces will join this ranks in the future, so that more employees' housing provident funds can play their due value. At that time, employees will no longer worry about the usefulness of the provident fund, but will see it as an important help to realize their dream of buying a house.

With the introduction of the new non-local loan policy by the Ministry of Housing and Urban-Rural Development, the housing provident fund system has once again ushered in major changes, bringing real benefits to the majority of depositors. In the past two years, more than 100 cities across the country have raised the upper limit of the contribution base of the housing provident fund. In the bustling city of Shanghai, for example, the contribution base of the housing provident fund has jumped from 4,521 yuan to 28,017 yuan. This means that for those who work hard in Shanghai, if their wages exceed this new cap, the company will pay them an additional 542.5 yuan in the housing provident fund (calculated at the 12% contribution rate), which is undoubtedly equivalent to an indirect increase of 542.5 yuan in salary income.

Over the past few years, the pace of reform of the housing provident fund system has been steady and firm. The scope of its use continues to expand, and the opening of non-local loan business is just around the corner, which is undoubtedly a series of exciting news for the majority of depositors. According to the National Bureau of Statistics, by the end of 2022, 168 million people across the country have actively participated in the contribution of the housing provident fund, which fully demonstrates the recognition and trust of the majority of employees in the housing provident fund system.

In the author's view, the housing provident fund is not only an important welfare treatment for ordinary workers, but also an indispensable part of the national social security system. Although it is sometimes questioned by some economists and entrepreneurs, the state has always adhered to its original intention and continuously improved and optimized the housing provident fund system according to the actual situation to ensure that it brings tangible benefits to more contributors. With the deepening of the reform, we have reason to believe that the housing provident fund will play a more important role in the future, adding more security and warmth to the lives of the majority of employees.

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