Notice of Ministry of Housing & Urban-Rural Development, Ministry of Finance, and People’s Bank of China on Issuance of 2014 National HPF Annual Report

JJ No. 78-2015
 

To all provincial and automous regions’ housing & urban-rural development departments and finance departments, People’s Bank of China’s Shanghai headquarter, various branches and operational management divisions, provincial and sub-provincial city level general sub-branches, housing provident fund management committees of all directly governed municipalities and Xinjiang Production and Construction Corps, housing provident fund management centers:

We hereby issue to you the 2014 National Housing Provident Fund Annual Report (hereinafter referred to as Report). The Report shall also be posted on the websites of Ministry of Housing & Urban-Rural Development, Ministry of Finance and People’s Bank of China.

Attachment: 2014 National Housing Provident Fund Annual Report

Ministry of Housing & Urban-Rural Development of the People’s Republic of China
Ministry of Finance    
People’s Bank of China       
8 June 2015       

Attachment:

2014 National Housing Provident Fund Annual Report
 

We hereby issue the 2014 National Housing Provident Fund Annual Report as follows in accordance with the provisions specified in Notice of MOHURD, MOF and PBOC on Improving Housing Provident Fund Information Disclosure System (JJ No. 26-2015)in a bid to execute the mandate of building an open and normative housing provident fund system and improving the mechanism for housing provident fund withdrawal, use and monitoring set out in Decision of CPC Central Committee on Several Important Issues Concerning Comprehensively Deepening Reforms by the Third Plenary Session of the Eighteenth Committee of the CPC.

1. Institutional Profile

(1) Ministry of Housing & Urban-Rural Development is responsible for drawing up housing provident fund policies jointly with Ministry of Finance and the People’s Bank of China, and supervising their implementation. The housing and urban-rural development department at provincial or autonomous region level is responsible for supervising implementation of housing provident fund management policies and regulations jointly with the finance department and the branch of the People’s Bank of China within the corresponding administrative region. In 2008, Ministry of Housing & Urban-Rural Development established its housing provident fund surveillance department, and the housing and urban-rural development departments at various provinces and autonomous regions established their housing provident fund surveillance divisions (or Offices). The full-time hpf supervisory staff at both the ministry and provincial levels aggregated 134 by the end of 2014.

 (2) Housing provident fund management committees were established in municipalities directly under the Central Government, cities where the people’s government of a province or an autonomous region is located, and cities (prefectures, autonomous prefectures or leagues) with subordinate districts. Housing provident fund management committee is the decision-making organ of the housing provident fund administration in a city, responsible for formulating and adjusting concrete regulatory measures on housing provident fund and supervising enforcement operations thereof, reviewing housing provident fund payment and use plans and execution reports for approval, deliberating issues such as schemes on allocation of housing provident fund value-added proceeds. The housing provident fund management committee is constituted of responsible persons from the people’s government and relevant departments such as construction, finance and the People’s Bank of China, and relevant experts, trade union representatives, staff representatives and organization representatives.

 (3) Each municipality or city where the people’s government of a province or an autonomous region is located, or city with subordinate districts, has one housing provident fund management center. A housing provident fund management center is an independent institution directly under the people’s government of a ctiy, responsible for housing provident fund management and operation.

As of the end of 2014, 342 housing provident fund management centers have been established in the nation’s cities with subordinate districts (including Xinjiang Production & Construction Corps), comprising 129 government institutions tantamount to functionaries in terms of management, and 213 general public institutions. A total of 208 sub-centers had not yet been integrated into the consolidated management of the cities comprising subordinate districts, including 98 sub centers in counties (or cities, districts), 86 sub centers for enterprises of such sectors as petroleum, electric power and coal, and 24 sub centers directly under provincial governance. The staffers of the nation’s housing provident fund administrative organs totaled 36,600, including 25,700 registered staffers and 10,900 unregistered staffers.

(4) A housing provident fund management committee charges a commercial bank (or commercial banks) with housing provident fund financial services handling in accordance with the regulations of the People’s Bank, entrusting the commissioned bank(s) with financial services such as housing provident fund account registration, payment and repayment processing as well as housing provident fund loans handling and account settlement. Currently, the commissioned commercial banks are mainly comprised of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and China Bank of Communications

2. Operational Status

(1) Payment: According to Regulations on Management of Housing Provident Fund and relevant policies, both the entity and the employee should make housing provident fund payment on a monthly basis at a rate not less than 5% and not higher than 12% of the employee’s average monthly salary of the previous calendar year. The monthly housing provident fund payment base, in principle, should not exceed twice or three times the employee’s average monthly salary of the previous year publicized by the statistical authority of the city with subordinate districts where the employee is working. The housing provident fund contributed by both the entity and the employee is the employee’s own property. The housing provident fund management center calculates and pays the interest to paying employees per the rate prescribed by the People’s Bank.

The year’s actual housing provident fund paying entities recorded 2.065 million, and the actual paying employees hit 118.7739 million, up 14.05% and 9.19% respectively from the previous year. The newly registered entities in the year totaled 226,800, and the newly registered employees reached 15.757 million, with net increase of 254,400 actual paying entities and 9.9953 million actual paying employees.

The annual housing provident fund payment amount totaled 1.295687 trillion yuan, up 12.41% from the previous year. The year-end payment amount aggregated 7.485268 trillion yuan, and the payment balance after deduction of the withdrawal amount totaled 3.704683 trillion yuan, up 20.88% and 16.97% respectively from the end of the previous year.

Table 1: Figures of Housing Provident Fund Payment;

Chart 1: Percentages of Actual Paying Employees in 2014 by Nature of Entities

(2) Withdrawal: As per Regulations on Management of Housing Provident Fund, a paying employee is entitled to withdraw housing provident fund in the personal account under the situations such as buying, building, renovating or rebuilding a home, repaying a home loan, renting a home at a cost higher than a precribed proportion of the family’s salary, or retirement or honourary retirement. A paying employee is entitled to withdraw all the housing provident fund in the personal account and deregister the account under the situations such as retirement or honourary retirement, terminating labour relationship with the entity due to total loss of earning capacity, going overseas to reside abroad, death or declared death.

The year’s housing provident fund withdrawals recorded 758.196 billion yuan, accounting for 58.52% of the annual payment amount, up 13.99% from the previous year. Among them, the housing consumption oriented withdrawals totaled 571.452 billion yuan, and the non housing consumption withdrawals 186.744 billion yuan, covering 75.37% and 24.63% respectively.

The year-end housing provident fund withdrawal amount aggregated 3.780626 trillion yuan, accounting for 50.51% of the aggregated payment amount.

Chart 2: Percentages of the 2014 Withdrawals by Type/Use

 (3) HPF Loans

1) Home loans: As per Regulations on Management of Housing Provident Fund, a paying employee is entitled to apply for a housing provident fund home loan for buying, building, renovating or rebuilding a home. The housing provident fund loan cap and the specific loan criteria are determined by the housing provident fund management committee of the corresponding city with subordinate districts, and the pertinent loan interest rates are adopted as per the regulations of the People’s Bank.

Altogether 2.2251 million housing provident fund home loans, equivalent to 659.302 billion yuan, were lent out in the year, down 13.14% and 14.18% respectively from the previous year, and the annual collecting on housing provident fund home loans recorded 278.69 billion yuan, up 12.16% from the previous year, with an additional annual housing provident fund home loan balance of 380.612 billion yuan, and a market share of 19.22% (ratio of the additional annual housing provident fund home loan balance to the sum of the commercial home loan amount and the additional housing provident fund home loan balance).

As of end of 2014, the cumulative amount of the 21.8585 million home loans totaled 4.22453 trillion yuan, up 11.32% and 18.49% respectively from the end of the previous year. The year-end home loan balance recorded 2.552194 trillion yuan. The home loan percentage was 68.89%, up 0.33% from the end of the previous year.

Table 2: An Illustration of HPF Home Loans

 2) Housing provident fund project loans in support of security housing construction: As per Working Instructions on Pilot Projects of HPF Loans in Support of Security Housing Construction (JJ No. 160-2009) jointly issued by the seven ministries and commission (including Ministry of Housing & Urban-Rural Construction and Ministry of Finance) after endorsed by the State Council, Ministry of Housing & Urban-Rural Construction, together with Ministry of Finance and the People’s Bank, jointly approved 93 hpf project loan pilot cities across the country, with 439 pilot projects and 124.803 billion yuan worth of ratified loans.

The year’s housing provident fund loans issued for pilot projects recorded 14.321 billion yuan, comprising 4.572 billion yuan worth of loans for affordable housing, 4.576 billion yuan worth of loans for relocation housing projects for shanty town area’s reconstruction, and 5.173 billion yuan worth of loans for public rental housing. The project loan principals payables was 13.516 billion yuan, and the actual collections amounted to 17.276 billion yuan.

As of end of 2014, the cumulative loans issued for pilot projects recorded 77.58 billion yuan, comprising 20.96 billion yuan worth of loans for affordable housing, 31.321 billion yuan worth of loans for relocation projects for shanty areas’ reconstruction, and 25.299 billion yuan worth of loans for public rental housing. The cumulative project loan principals collected reached 32.494 billion yuan, with a project loan balance of 45.086 billion yuan. The loan principals and interests of 104 pilot projects had been paid off.

Table 3: An Illustration of HPF Loans on Pilot Projects

 (4) National debt: As per Regulations on Management of Housing Provident Fund, a housing provident fund management center, with the approval of the housing provident fund management committee in a city comprising subordinate districts, is entitled to use the housing provident fund to buy national debt on the premise of ensured withdrawal and loan oriented use as a priority. The year-end balance of the national debt registered 4.886 billion yuan, down 6.037 billion yuan from the end of the previous year.

 3. Service Revenues and Expenses, and Value-Added Proceeds

 (1) Service Revenues: The annual housing provident fund service revenues totaled 149.673 billion yuan, up 19.51% from the previous year, comprising the commissioned deposit interest income of 40.496 billion yuan, the commissioned loan interest income of 108.192 billion yuan, the national bond interest income of 608 million yuan and miscellaneous income of 377 million yuan.

 (2) Service expenses: The annual housing provident fund service expenses totaled 81.971 billion yuan, up 14.56% from the previous year, comprising the interest payment of 75.184 billion yuan to paying employees, the collection fee of 2.003 billion yuan, the loan service commission expense of 4.298 billion yuan and miscellaneous expenses of 486 million yuan.

 (3) Value-added proceeds: Housing provident fund value-added proceeds results from subtraction of the housing provident fund service expenses from the housing provident fund service income. The annual value-added proceeds totaled 67.702 billion yuan, up 26.09% from the previous year.

 (4) Allocation of value-added proceeds: Housing provident fund value-added proceeds, as per Regulations on Management of Housing Provident Fund, shall be used to establish risk reserve funds for housing provident fund loans, and as administrative expenses of the housing provident fund management center and supplemental funds for constructing urban public rental housing (low-rent housing). Risk reserve funds is established for ratification at a rate not lower than 60% of the housing provident fund value-added proceeds, or not lower than 1% of the annual housing provident fund loan balance.

The annual apportionment of the housing provident fund loan risk reserve funds recorded 15.47 billion yuan, the administrative expenses 8.721 billion yuan, and the supplemental funds for constructing urban public rental housing (low-rent housing) 118.646 billion yuan.

 (5) Disbursement of administrative expenses: Administrative expenses are the expenses disbursed by provident fund centers in various regions to ensure housing provident fund management and operation in accordance with the regulations, and are comprised of personnel expenditure, public expenditure and special expenditure. The disbursement of the annual administrative expenses recorded 7.098 billion yuan, down 5.41% from the previous year, with personnel expenditure at 2.913 billion yuan, public expenditure 1.109 billion yuan and special expenditure 3.076 billion yuan, accounting for 41.04%, 15.62% and 43.34% respectively.

4. Asset Risks

(1) Personal Home Loans: As of end of 2014, default mortgage loans recorded 316 million yuan, with a delinquency rate of 0.12‰, up 0.01 per-millage point over the end of the previous year. The annual use of the personal home loan risk reserve fund for stagnant or bad debt write-off registered one million yuan. The year-end home loan risk reserve fund balance was 89.507 billion yuan, accounting for 3.51% of the personal home loan balance. The percentage of the default mortgage home loan amount to the personal home loan risk reserve fund balance was 3.53%.

(2) Pilot Project Loans: As of end of the year, no default pilot project loan was discovered. No project loan risk reserve fund was used in the year. The year-end project loan risk reserve fund balance recorded 2.541 billion yuan, accounting for 5.64% of the pilot project loan balance.

(3) Risk Assets Left Over by History: Risk Assets Left Over by History refers to the uncollectible overdue receivables of housing provident fund principals and interests in the occurrence of project loans, national bond purchase, or unauthorized misappropriation or diversion by certain local governments as a result of the deficiency of the system and management in the initial stage of the housing provident fund system development.

Annual collections of risk assets left over by history recorded 555 million yuan. As of end of 2014, the nation’s housing provident fund risk assets left over by history amounted to 724 million yuan. Efforts for collections were redoubled in various regions during January-May 2015, with an additional 289 million yuan collected. As of 31 May, the nation’s housing provident fund risk assets left over by history totaled 435 million yuan, including 115 million yuan worth of left-over past-due project loans and misappropriated/diverted fund, and 320 million yuan worth of left-over overdue national debt.

Table 4: A List of Risk Assets Left over by History (unit: 10,000 yuan)

5. Major Issues

(1) Expanded the scope of use and adjusted home loan policies: To better bolster first home buyers’ and improvement-oriented home buyers’ purchase power, Ministry of Housing & Urban-Rural Development, Ministry of Finance and the People’s Bank of China jointly issued Notice on Developing HPF Home Loans Services (JJ No. 148-2014) in October 2014, addressing the requirements for measures such as loosening lending criteria and easing the loan caps, ratcheting up the service for nonlocal home loans, reducing intermediary commission payment associated with loans, streamlining loan handling process and vitalizing existing loan assets.

(2) Cut loan interest rates to boost housing consumption: The  interest rates of housing provident fund deposits and loans were cut as of 22 November 2014 as per Notice of PBOC on Cutting Financial Institutions’ RMB Loan and Deposit Benchmark Interest Rates and Further Pushing Forward Market-Based Reform of Interest Rates (BI No. 348 [2014]).

(3) Conducted special supervisory inspection in a bid to improve the service system: To develop a user-friendly housing provident fund management service system to help resolve the concerns of the masses, Ministry of Housing & Urban-Rural Development organized and conducted a round of special supervisory inspection during July-December 2014 to enhance and improve housing provident fund services for comprehensive upgrade of housing provident fund service quality.

(4) Launched the SMS 12329 service to expand the service channel: Ministry of Housing & Urban-Rural Development further developed and launched the SMS 12329 service across the country in 2014, in wake of rollout of Hotline 12329 in 2012, supervising and expediting development of provincial-level SMS 12329 platforms in various provinces for steady improvement of comprehensive service standards for housing provident fund.

(5) Implemented basic data standards and promoted the housing provident fund bank settlement system: Ministry of Housing & Urban-Rural Development issued Housing Provident Fund Basic Data Standards in October 2014 in a move to regulate housing provident fund informatization construction in various regions, and also promoted the data application system for housing provident fund bank settlement in wake of successful pilot development of its prototype, in an effort to attain effective integration of the fund, the services and the financial management to increase fund settlement efficiency and enhance fund management and service capability of the housing provident fund centers at various regions.  

 (6) Tighten control of risks as well as rules on probity in the administration to ensure fund safety: To further enforce Notice on Enhancing Housing Provident Fund’s Precautionary and Preventive Measures against Risks Regarding Administration Probity (JJ No. 170-2011), Ministry of Housing & Urban-Rural Development urged all regions to quicken the pace of development of housing provident fund’s precautionary and preventive system and long-term mechanism for administration probity as of August 2014, and conducted self checking and correction programs for precaution against and prevention of risks in administration probity to ensure safety of housing provident fund.

The year 2015 is crucial for further implementing the Resolutions by the Third Session of the Eighteenth Committee of the CPC and delving into and pushing forward the housing provident fund reform. As the nation’s economic development has entered its “new normal” stage,we are gearing up for confronting new situations and tasks in the course of the housing provident fund system reform and development. We shall actively adapt housing provident fund management to the new normal stage by means of ramping up measures such as amendment of Regulations on Management of Housing Provident Fund and improvement of policies on housing provident fund withdrawal and use for deeper reforms, stepping up effort in personal home loan issuance to boost housing consumption and bring housing provident fund into better play, creating housing provident fund’s comprehensive service platform to upgrade the service standards in the whole industry, enhancing housing provident fund supervision to ensure fund safety and intactness, persevering in ruling by law to safeguard paying employees’ legitimate rights and interests and help them achieve the goal of having a home to live in.