Several provincial-level regions unveil cuts in housing provident funds

Potential homebuyers examine a property project model in Yichang, Hubei province, June 4, 2016.[Photo/VCG]

Several provincial-level regions unveiled their plans to cut the contribution rates of housing provident funds, reported chinanews.com on Tuesday.

The website said that Hebei, Tianjin, Fujian, Jilin, Ningxia, Qinghai and Chongqi have made their programs public, and the rate will stay below the 12 percent ceiling.

According to a routine government meeting on April 13, the required contribution rates of housing provident funds will be lowered in a two-year period starting May 1 and the rate should stay below 12 percent.

Tianjin municipality, for example, lowered the contribution rates of housing provident funds to 12 percent from 15 percent starting May 1.

According to Lu Kehua, deputy minister for the Ministry of Housing and Urban-Rural Development, lowering the percentage can ease the burden on companies, strengthen their vitality and boost job growth.

For employees, although the income from the housing provident funds account is affected, the monthly wage is expected to see an increase.

An employee working at a bank in Tianjin confirmed that the contribution rates of housing provident funds was lowered to 12 percent starting May 1. Although the amount of the housing provident funds account was reduced, his monthly wage went up by more than 200 yuan, he said.

The housing provident fund is a savings program that allows employees and employers to set aside a portion of wages to be used as deposits on home purchases.

The People's Bank of China said earlier that the deposit interest rate for housing provident funds will be increased to 1.5 percent starting from Feb 21. The former rate was 0.35 percent or 1.1 percent, depending on when the deposits were placed.