2014 Annual Report on Shanghai Housing Provident Fund

We hereby release 2014 Annual Report on Shanghai Housing Provident Fund as follows in accordance with the state council’s Regulations on Management of Housing Provident Fund and Notice of MOHURD, MOF and PBOC on Improving Housing Provident Fund Information Disclosure System, in wake of the audit, and the perusal and approval of 46^th plenary congress of Housing Providnt Fund Management Committee of this Municipality.

1. Institutional Profile

(1) Housing Provident Fund Management Committee

Shanghai Housing Provident Fund Management Committee (hereinafter referred to as the “PF Management Committee”) is the housing provident fund management decision-making institution directly subordinate to the municipal government. The PF Management Committee is mainly responsible for formulating and adjusting concrete housing provident fund management measures in accordance with pertinent laws, regulations and policies, and supervising their implementation; drawing up specific housing provident fund payment rates; setting housing provident fund loan cap; reviewing and approving housing provident fund collection and use plan; deliberating on housing provident fund value-added proceeds distribution proposals, reviewing and approving reports on execution of housing provident fund collection and use plans. Currently the PF Management Committee comprises 21 members, namely, chair Huang Rong, vice chairs Ni Rong, Cao Jizhen, Liu Haisheng and Ma Li, other members Ma Zhengwen, Ma Yongjian, Rong Zhiqin, Jiang Zihao, Li Yingjiu, Wu Gang, Jin Yaming, Zheng Yuanhu, Shao Xiaoming, Zhao Biao, Hou Jijun, Shi Zhengfeng, Huang Min, Jiang Yunfeng, Jiang Songtao and Cai Ying.

Address of PF Management Committee’s Office: No. 100 Da Gu Road; Telephone Number: 23113168

The Municipality’s Housing Provident Fund Management Committee convened five meetings in 2014, and approved the following housing provident fund policies (proposals):

(2) HPF Management Center

Shanghai Provident Fund Management Center is an independent nonprofit institution directly subordinate to the municipal government, mainly in charge of the Municipality’s housing provident fund payment, withdrawal, use, value preservation and addition, and accounting. The Center currently has 13 functional sections, comprising party committee’s office (organization & personnel section), general office, policies and regulations section, planning and financial section, loan management section, collection management section, discipline inspection and auditing section, operational accounting and information section, technical development section, service management section (complaints and grievances handling office), website management office, law enforcement supervising section, project management section; and 17 districts/county management divisions, including Pudong, Huangpu, Xuhui, Changning, Jing’an, Putuo, Zhabei, Hongkou, Yangpu, Minhang, Baoshan, Jiading, Jinshan, Songjiang, Qingpu, Fengxian and Chongming.

Steering committee members and their responsibilities:

   Management divisions’ addresses, service hours and telephone numbers:

   Website and New Media Service Platforms

2. Operation of Services

 (1) Payment

China Construction Bank Corporation’s Shanghai Branch is commissioned to handle housing provident fund payment service in this Municipality.

Housing provident fund paying entities totaled 210,100 in 2014, up 43,700 from the previous year; and paying employees totaled 6.6284 million, up 0.6539 million. Newly registered paying entities recorded 48,400 in the year, and newly registered paying employees 893,300. Housing provident fund and additional provident fund payment amounted to 78.687 billion yuan, up 15.10% year on year. As of end of 2014, payment amount aggregated 521.559 billion yuan, and payment balance 245.208 billion yuan, up 17.77% and 16.08% year on year respectively.

(2) Withdrawal

In 2014, housing provident fund and additional provident fund withdrawal amounted to 44.718 billion yuan, accounting for 56.83% of the annual payment amount, up 1.78 percentage points from same period of the previous year. As of end of 2o14, withdrawal amount aggregated 276.351 billion yuan, up 19.31%.

(3) Loan

 1) Home Loans

Altogether 18 banks have been commissioned housing provident fund home loans service in this Municipality, including Shanghai Branch of Industrial and Commercial Bank of China, Shanghai Branch of Agriculture Bank of China, Shanghai Branch of Bank of China, Shanghai Branch of China Construction Bank, Shanghai Branch of China Bank of Communications, Shanghai Branch of Shanghai Pudong Development, Shanghai Branch of China CITIC Bank, Shanghai Branch of China Merchants Bank, Shanghai Branch of China Everbright Bank, Shanghai Branch of Huaxia Bank, Shanghai Branch of China Minsheng Bank, Shanghai Branch of Industrial Bank Co., Ltd., Shanghai Branch of China Guangfa Bank, Shanghai Branch of Ping An Bank, Shanghai Branch of Ningbo Bank, Shanghai Bank, Shanghai Rural Commercial Bank, and Shanghai Branch of Beijing Bank.

The Municipality’s maximum housing provident fund home loan amount per family in 2014 was 600,000 yuan, and if the family has been paying additional provident fund, the maximum per family could reach 800,000 yuan. See below for clarification:

Housing provident fund home loans issued in 2014 recorded 47.22 billion yuan, involving 121,500 home purchasing families, down 23.16% and 23.43% year on year respectively. Home loan repayment collection amounted to 24.851 billion yuan. As of end of 2014, the Municipality’s cumulative home loans, issued to 1.9555 million home purchasing families, reached 409.536 billion yuan, up 6.62% and 13.03% year on year respectively. The balance of home loans totaled 201.2 billion yuan, up 12.51% year on year. The home loans percentage (ratio of year-end home loans balance to year-end hpf payment balance) recorded 82.05%, down 2.61 percentage points from same period of the previous year.

2) HPF Loans in Support of Security Housing Construction Projects

Housing provident fund loans issued for security housing projects in 2014 recorded 894 million yuan. The loan principals repayment due was 811 million yuan. The actual loan principals collection amounted to 2.478 billion yuan. As of end of 2014, balance of project loans was 5.568 billion yuan, and the cumulative loans issued recorded 8.854 billion yuan.

(4) National Debt Purchase

No national debt was purchased in 2014 in light of yield and fluidity. National debt balance at end of the term was zero.

(5) Fund Savings

As of end of 2014, fund deposits balance recorded 2.748 billion yuan, comprising zero demand deposit, 13 million yuan of time deposits with a term within one (incl.) year, 1.993 billion yuan of over one year term deposits, and 742 million yuan of miscellaneous deposits (such as negotiated deposits and notice deposits).

(6) Miscellaneous

Year-end fund use rate (ratio of the sum of housing provident fund home loans balance, project loans balance and national debt balance to the payment balance) for 2014, due to slowdown of home loans balance growth and decrease of project loans balance turned out to be 84.32%, down 3.72 percentage points from same period of the previous year.

3. Main Financial Data

(1) Services Revenues

Housing provident fund services revenues in 2014 totaled 11.314 billion yuan, up 20.52% year on year, comprising 2.222 billion yuan of deposits interest income, 8.967 billion yuan of commissioned loans interest income, and 125 million yuan of miscellaneous income.

(2) Service Expenditure

Housing provident fund services expenses in 2014 totaled 5.716 billion yuan, up 13.76% year on year, comprising 5.085 billion yuan of interest expenses for paying employees’ accounts, 165 million yuan of collection commission fees, 390 million yuan of fees for commissioned loans, and 76 million yuan of miscellaneous expenses.

(3) Value-Added Proceeds

Housing provident fund value-added proceeds in 2014 totaled 5.598 billion yuan, up 28.31% year on year. Value-added return rate (ratio of value-added proceeds to average monthly payment balance) recorded 2.45%, up 0.23 percentage point from same period of the previous year.

(4) Value-Added Proceeds Allocation

As deliberated and approved by the 45^th session of the Municipality’s housing provident fund management committee, no risk reserve fund accrued for home loans was withdrawn from the annual housing provident fund valu-added proceeds in 2014 in view of the home loans risk reserve appropriation coverage rate much higher than the level of commercial banks. As required by Measures on Financial Management of Housing Provident Fund Aided Security Housing Construction, 4% of the year-end project loans balance should be withdrawn as loans risk reserve fund. However, due to reduced 2014 year-end project loans balance, modified accrual accounting method was used to claw back appropriations of 63 million yuan as project loans risk reserve fund, in tandem with withdrawals of 87 million yuan as overhead expenses, 5.574 billion yuan as supplementary fund for construction of urban low-rent housing (public rental housing). Overhead expenses delivered to local finance bureau in the year recorded 87 million yuan.

As of end of 2014, balance of loan risk reserves was 14.931 billion yuan; cumulative urban low-rent housing (public rental housing) construction supplementary fund delivered to local finance bureau recorded 366 million yuan (monetary subsidy paid to low-rent housing residents), with a balance at 14.755 billion yuan.

(5) Overhead Expenses

Overhead expenses in 2014 totaled 85 million yuan, comprising 41 million yuan of staff expenses, 9 million yuan of public expenses, and 35 million yuan of special expenses for items such as information system construction, service outlets construction and service upgrade measures. In general, various overhead expenses were maintained at a low level.

 4. Asset Risks

(1) Home Loans

As of end of 2014, default mortgage loans recorded 32 million yuan, with a delinquency rate of 0.16‰. The balance of home loan risk reserves was 14.708 billion yuan, accounting for 7.31% of the home loans balance. The percentage of the default home loans amount to home loan risk reserves balance recorded 0.22%.

(2) Housing Provident Fund Loans in Support of Security Housing Construction

As of end of 2014, no default project loans was discovered. The project loan risk reserves accrual accounted for 4% of the loans balance. The project loan risk reserves balance recorded 223 million yuan, namely, 4% of the project loans balance.

(3) Risk Assets Left Over by History

As of end of 2014, no risk assets left over by history was discovered.

5. Social and Economic Benefit

(1) Payment

Growth rates of the number of actual housing provident fund paying employees and the payment amount in 2014 recorded 10.94% and 15.10% respectively. The actual paying employees consist of the following:

In terms of entity types, employees of state organs and institutions accounting for 10.74%, employees of state-owned enterprises 16.45%, employees of urban collective enterprises 2.58%, employees of foreign-invested enterprises 19.79%, employees of private enterprises and other enterprises in urban areas 47.81%, private non-enterprise entities and associations 0.60%, and miscellaneous 2.03%.

In terms of income levels, low-income employees (with a hpf payment base not greater than average salary of employees in the Municipality in 2013) accounting for 57.13%, medium level income employees (with a hpf payment base being one time to three times the average salary of employees in the Municipality in 2013) 39.93%, and high level income employees (with a hpf payment base greater than three times the average salary of employees in the Municipality in 2013) 2.94%.

(2) Withdrawal

In 2014, 15.4134 million hpf withdrawals recorded a total amount of 44.718 billion yuan, comprising housing consumption oriented withdrawals, accounting for 76.77% (8.58% for purchase, construction, rebuilding and major overhaul of homes, 67.86% for repayment of home purchase loans, 0.12% for rental housing, 0.21% for miscellaneous), non housing consumption type withdrawals 23.23% (18.80% for retirement and honoured retirement, 0.01% for termination of labour contract with the entity due to total loss of ability to work, 3.37% for domicile relocation to other cities or emigrating abroad, 1.05% for miscellaneous).

(3) Loan

1) Home Loans

In 2014, home loans market share (ratio of newly-added balance of hpf home loans in the year to the sum of newly-added balances of commercial and hpf home loans in the Municipality) reached 28.64%. The year’s housing provident fund home loans, as per the signed contracts and based on the current interest rates, would significantly reduce the home purchase loans applicants’ interest expenses by 11.408 billion yuan.

By area, the purchased homes comprise 67.45% of homes below 90 (incl.) square meters, 27.98% greater than 90 square meters and less than 144 (incl.) square meters, and 4.57% over 144 square meters. Among them, newly built residences account for 43.11%, and second-hand homes 56.89%.

Among the housing provident fund borrowers, low-income employees (with a hpf payment base not greater than average salary of employees in the Municipality in 2013) account for 41.28%, medium level income employees (with a hpf payment base being one time to three times the average salary of employees in the Municipality in 2013) 55.30%, and high level income employees (with a hpf payment base greater than three times the average salary of employees in the Municipality in 2013) 3.42%.

2) HPF Loans in Support of Security Housing Construction

Altogether 15 pilot projects of hpf loans aided security housing construction were launched , comprising 3 joint-ownership security housing projects, 9 relocation housing projects for shanty towns reconstruction and 3 public rental housing projects, bolstering the construction of 1.929 million square meters of security housing in terms of buidling area, to the benefit of 28,100 low and medium income employee families.

(4) Housing Contribution Rate

Housing provident fund played a significant positive role in 2014 in supporting paying employees’ housing consumption and the city’s security housing construction. Housing contribution rate (percentage of the sum of the year’s home loans issued, project loans issued and withdrawals due to housing consumption to the year’s payment amount) hit 104.77%, embodying the advantages of the housing provident fund system, in light of its contribution by the residents and for the residents.

6. Other Major Issues

(1) Adjustment of Policies

The Municipality’s housing provident fund policies were adjsuted in line with the overall requirements of the state and macro-regulatory policies of the Municipality’s property market. Firstly, housing provident fund home loans policies were adjusted in accordance with Notice of PBC and CBRC on Further Improving Housing Financial Services and Notice of MOHURD, MOF and PBC on Developing HPF Home Loans Services, in a bid to ease credit policies for housing provident fund loans in support of improvement oriented second suite ordinary homes, change the means of securing housing provident fund mortgage, eliminate institutions’ compulsory housing provident fund mortgage guarantee charges. Secondly, the Municipality’s housing provident fund deposit and lending interest rates were cut as of 22 November 2014 as per PBOC’s notice on interest rates cut. After adjustment, the deposit interest rate for housing provident fund collected within the year remained unchanged at 0.35%, interest rate for housing provident fund deposits carried forward from the previous year is 2.35%; interest rate for housing provident fund home loans over 5 years was 4.25%, interest rate for housing provident fund home loans below 5 years (incl.) was 3.75%. Thirdly, relevant policies for housing provident fund withdrawals due to rent and property service charges payment were adjusted to further boost employees’ housing consumption by such means as expanding withdrawal scope, lifting withdrawal caps and adjusting withdrawal frequencies.

Relevant policies were adjusted as per requirements of housing provident fund management of the Municipality. The first was to adjust the housing provident fund payment base and monthly payment amount caps and floors for fiscal year 2014. As of 1st July 2014, employees’ housing provident fund payment base shall be adjusted from average monthly salaries of 2012 to average monthly salaries of 2013. In fiscal year 2014, the housing provident fund monthly payment amount cap is 2116 yuan, and 3626 yuan is set as the housing provident fund monthly payment amount cap for owners of individual industrial & commercial household businesses (shortened as “individual businesses”) in urban areas and their employees as well as freelancers; the housing provident fund monthly payment amount floor, pursuant to payment rate of 7%, is 226 yuan, which shall also be the housing provident fund monthly payment amount floor for owners and employees of individual businesses in urban areas as well as freelancers.The hpf payment rates in fiscal year 2014 shall be 7% for both the entity and its employees, and the additional housing provident fund payment rates shall range from 1% to 8% respectively. The second was to revise and release Measures on Shanghai Housing Provident Fund Account Blocking Management and relevant working instructions in an effort to standardize and enhance management of personal housing provident fund accounts in this Municipality. The third was to promulgate and implement Measures on Shanghai Housing Provident Fund Information Disclosure (Trial Implementation) for standardized management of the Municipality’s housing provident fund information disclosure. The fourth was to enact and implement Measures on Management of Lease Price for SPFMC’s Public Rental Housing (Trial Implementation) in a bid to further improve lease price management for public rental housing. In addition, the initiative for cleanup of the normative documents issued during 1991-2012 period was conducted and completed, with a list of abolished/rescinded normative documents publicized.

(2) Expanding HPF System Coverage

A slew of measures were taken to expand housing provident fund system coverage for substantial growth of paying employees. The first was to establish information sharing mechanism in coalition with the municipal industrial and commercial bureau, the municipal local taxation bureau and the municipal human resources and social security bureau so as to obtain timely information about those entities failing to fulfill registration and account opening procedures or make housing provident fund payment, and therefore launch targeted publicity services for housing provident fund coverage expansion. The second was to conduct pertinent activities for inspection of housing provident fund payment. Self-checking lists were delivered to and collected from 200,000 entities. Targeted inspection of firms in auto sales industry helped set a new mode for industry-specific law enforcement inspection practice. The third was to give play to the mechanism of orchestrated coalition with multiple departments in combined effort to boost housing provident fund payment coverage, uniting with the commissioned banks to enhance publicity and service to the entities, and cooperating with the municipal trade union in launching the 5^th “Top 100 Best Credit Enterprises” appraisal activity to increase entities’ ideological awareness of housing provident fund payment compliance. The fourth was to step up law enforcement for safeguarding employees’ rights and interests.

(3) Informatization

In the informatization-focused year 2014, the Center took a series of measures to upgrade housing provident fund management and service informatization, comprising development and construction of entity oriented provident fund information management system for internal and external information integration to step up activities such as payment coverage expansion and law enforcement, completion and trial operation of provident fund information system’s disaster recovery and backup system for application-level disaster tolerance/response, construction of fund data exchange platform for interbank payment, and development of the information systems for provident fund withdrawals due to rent and property service charges payment to facilitate processes for paying entities and paying employees.

(4) Proactively Bolstering Security Housing Construction

In 2014, provident fund continued to bolster the endorsed pilot projects of security housing construction, with 894 million yuan issued for security housing construction. Collection of the loans was favorable. The first two provident fund loans aided security housing pilot projects were successfully completed.

The provident fund oriented public rental housing projects entered its post-investment phase. Jing Hua Fang, since inception of supply at beginning of the year, saw a rapid growth of residents moving in after signing the contracts. As of end of 2014, the occupancy rate of the 1680 sets of apartments climbed to 95.18%. Shang Jing Yuan also witnessed completion of lease price ajdustment as well as fulfillment of the first batch of residents’ lease contract renewal.

(5) Enhancing Services

The Center revised and publicized Instructions on SPF Services in a move to further streamline provident fund service procedures, provided real-time service volume data at various management divisions via the guiding system for over-the-counter services to maintain equilibrium of service volumes, promoted online provident fund services so that for the first time, all the entities adopted the online approach to annual payment base adjustment, launched query tools such as 12329 self service and sms service, ATM aided real-time self query services for personal housing provident fund account information, to facilitate diversified channels for various employees in different age groups to know the payment and use status in regard of their provident fund accounts.

Shanghai Provident Fund Management Center
31 March 2015