operational analysis report on shanghai housing provident fund in 2014
in 2014, the municipal provident fund center proactively implemented the resolutions of the third plenary session of the eighteenth committee of the cpc,with emancipated minds to deepen reform for continuous improvement and development of the functionality of housing provident fund systems. orderly stable operation of this municipality’s main housing provident fund services was maintained with sustained brisk growth of collection, paying employees and withdrawal. home loans declined in scale due to subdued housing transactions.
1. accomplishments of various services indexes
housing provident fund collection: collection of municipal housing provident fund and additional provident fund in 2014 increased by 14.91% year-on-year to 73.73 billion yuan, including 57.791 billion yuan housing provident fund, namely 78% of total collection amount, and 15.939 billion yuan additional provident fund, namely 22% of total collection amount. as of end of 2014, the cumulative collection of housing provident fund and additional provident fund amounted to 492.7 billion yuan.
housing provident fund payment: the municipal housing provident fund paying units climbed to 0.2093 million as of end of 2014, up 0.0451 million units year on year by 27.46%. paying employees edged up 0.5538 million in size to 6.0296 million, equivalent to 10.11% year on year.
housing provident fund withdrawal: withdrawal of housing provident fund totaled 44.718 billion yuan in 2014, up 18.81% year on year, including 34.328 billion yuan withdrawal due to housing consumption (up 16.79% year on year), and 10.39 billion yuan one-off closing-account withdrawal due to causes such as retirement (up 26.02% year on year). the cumulative withdrawal of housing provident fund hit 276.4 billion yuan as of end of 2014, equivalent to 56% of the cumulative collection amount.
housing provident fund lending: 47.22 billion yuan worth of housing provident fund home loan was lent out in 2014, down 23.16% year on year, to 121500 households, down 23.43% year on year, including 4.168 billion yuan worth of home loans to 14500 affordable housing purchasing households. housing provident fund home loans balance recorded 201.2 billion yuan as of end of 2014.
in 2014, 894 million yuan worth of housing provident fund loan was lent out to support security housing construction. and cumulative provident fund loans in support of security housing construction amounted to 8.854 billion yuan as of end of 2014, accounting for 73.89% of the entire housing provident fund loans of the municipality endorsed by the central government, as scheduled to bolster municipal security housing construction.
risks of housing provident fund loans: the delinquency rate for housing provident fund home loans was 0.157‰ as of end of 2014.
housing provident fund value-added proceeds: housing provident fund services revenues in 2014 recorded 11.314 billion yuan, and services expenses amounted to 5.716 billion yuan, with value-added proceeds hit 5.598 billion yuan, up 28.31% year on year.
2. characteristics of housing provident fund operation in 2014
1) sustained growth of paying employees and slower growth pace in collection amount
the number of the municipality’s housing provident fund employees as of end of 2014 hit a new record high of 6.0296 million , with a net increase of 0.55 million, ranking the second highest over the past ten years. below is a chart indicating the net increase of paying employees in the period 2005-2014:
net increase of paying employees in 2005-2014 (in thousand persons)
nudged up by growth of paying employees, housing provident fund collection in 2014 hit 73.73 billion yuan, up 14.91% year on year. the collection amount has sustained regular annual growth in the recent five years, with the year-on-year growth rate fluctuating between 15% and 20%. the growth rate of collection amount in 2014 was dragged down by subdued growth of paying employees’ average monthly payment amount per capita, dipping to near five-year low.
the main causes for the drag on growth of employees’ average monthly payment amount per capita: the first is the subdued growth of the municipality’s employee salary. as the economic operation enters its “new normal” stage, the municipality’s employee salary slackens its pace of growth. as of end of 2014, the average monthly payment amount of the municipality’s paying employees recorded 852 yuan, up 5.2% from same period of last year, lower than growth rate of the municipality’s average employee salary for last year. the second is the structural change of paying employees, as the retired had their accounts closed and the new hires had their accounts opened. the number of newly-opened accounts in 2014 reached 948800, equivalent to 16% of the total number of paying employee accounts, indicating an average monthly payment amount per capita at 438 yuan, 414 yuan less than the municipality’s average.
in light of the “new normal” of economic growth and the adjustment of salary structure, slackened pace of growth in annual housing provident fund collection amount shall also become a “new normal”.
2) newly registered paying units hit a new record high, featuring a growing trend towards small startups in terms of size.
the municipal provident fund center adopted a variety of measures in 2014 to proactively expand housing provident fund system coverage. the first was to identify the objectives for coverage expansion by obtaining timely information about those units without registered accounts or housing provident fund payment via the information source sharing access bolstered by pertinent departments such as the municipal industry and commerce bureau, local taxation bureau and human resources and social security bureau. the second was to ramp up effort to press on with the liable units’ registration and full payment for safeguarding employees’ rights and interests in coalition with the municipal trade union and the commissioned collecting banks by resorting to measures such as targeted publicity and law enforcement inspection. the third was the units’ compliance awareness for housing provident fund registration and payment as the new policies pertaining to fund withdrawal and use for multifaceted housing consumption in the recent few years had made housing provident fund system more appealing. the number of the newly registered units in the municipality in 2014 recorded 59600, up 46.2% year on year. the municipality’s housing provident fund paying units as of end of the year totaled 209300, up 27.5% year on year. the number of newly opened unit accounts, the number of paying units and their growth rates all hit new highs since launch of the coverage expansion initiative in 2010.
further analysis of sizes of the newly-registered units in 2014 indicated: 1) the average number of paying employees per newly-registered unit in 2014 was 7, namely, 3 persons less than the previous year and 21 persons less than the average number of paying employees per paying unit for the current year; 2) of all the newly-registered units in 2014, those units with less than 5 paying employees accounted for 73%, up 2% from the previous year, up 27 percentage points from the percentage rate for those small entities with less than 5 paying employees amongst the existing paying units. therefore, with rapid development of the private sector businesses, adjustment and optimization of social and economic structures have nurtured burgeoning small or tiny startups, signaling the direction for the next move of the municipality’s housinig provident fund coverage expansion and corresponding security services.
3) housing provident fund home loans issued edged down in tandem with subdued housing transactions; nevertheless, adequate support to home loans applicants was maintained.
the municipality’s commercial housing transactions shrank due to correlation between housing demand and supply and pertinent policy adjustment in 2014, causing housing provident fund lending to decline. altogether 47.22 billion yuan was lent out to 121500 households in the year, both down 23% year on year. average size of housing provident fund home loan per family hit 390000 yuan in 2014, retaining a high level. aggregate home loans edged down; nevertheless, adequate support to home loans applicants was maintained. during the period from end of the third quarter to november, the state made a series of adjustments to home loan policies and cut the benchmark rate of rmb lending. the municipality’s differentiated housing provident fund credit policies and criteria for ordinary commercial housing were adjusted accordingly, catapulting the growth rate of the housing provident fund home loans’ average monthly lending volume to 82% in comparison with that of the period january-october, with the actual average home loan per family surging to 450000 yuan. consequently, housing provident fund home loans lent out in december jumped to the peak level of the second half year at 4.439 billion yuan. below is a chart indicating monthly hpf lending during the period 2013-2014:
monthly hpf lending in 2013-2014 (in billion yuan)
data analysis indicates that housing provident fund home loans have mainly shored up three types of housing consumption of paying employees’ families: a) first home purchase, accouting for 89%, nudged up to 95% after november; b) purchase of small- and medium- sized homes, 73% for homes of less than 90 square meters, 22% for homes of 90-140 square meters, and 5% for homes of over 140 square meters; c) purchase of low-priced homes, 84% for homes priced below 2.3 million yuan, 7% for homes at 2.3-3.1 million yuan, 5% for homes at 3.1-4.5 million yuan, and 4% for homes at over 4.5 million yuan. housing provident fund home loans have sustained firm support to low- and medium- income housing consumers as the mainstay.
hpf loan-aided purchase of homes at various price levels in 2014
moreover, housing provident fund home loans also underpinned housing consumption of joint-ownership security housing purchasers. the center’s cumulative housing provident fund home loans lent out to joint-ownership security housing purchasers as of end of 2014 reached 10.344 billion yuan, benefiting a total of 38400 families. the 2014 annual housing provident fund home loans lent out to joint-ownership security housing purchasing families neared 4.168 billion yuan, the highest since initial rollout of housing provident fund home loans to joint-ownership security housing purchasers, accounting for 8.8% of the year’s home loans issued in wake of the ease of eligibility criteria for joint-ownership security housing purchase and the optimization of application handling process.
4) sustained growth of value-added proceeds due to multiple factors such as interest rate cut by the central bank.
valued-added proceeds of the municipality’s housing provident fund in 2014 recorded 5.598 billion yuan, up 28.31% year on year, indicating a sustained steady growth mainly attributed to: a) interim growth of interest income due to the central bank’s cut of provident fund deposit and loan interest rates in november 2014; b) growth of interest income from housing provident fund loans for security housing projects. housing provident fund loans issued for the projects in 2014 totaled 894 million yuan. as of end of the year, the balance of housing provident fund project loans recorded 5.568 billion yuan. the interest income from housing provident fund project loans, with a rate 10% higher than the housing provident fund home loan interest rate for over five years, recorded 323 million yuan, up 15.36% year on year; c) growth of deposit interest income due to appropriate deposit schemes and ratio solutions, with the provident fund deposit interest rate lifted to 1.2 times the benchmark from the central bank’s stipulated 1.1 times after the center’s coordination with the finance agency about interest rate floating mechanism at the backdrop of market-driven interest rate reform, opting for the deposit placement conducive to both fluidity and lucrativeness with the ratio nudged up to over 80%.
3. key issues to focus on in 2015
the municipal provident fund center shall thoroughly implement the resolutions of the third and fourth plenary sessions of the eighteenth committee of the cpc in 2015, persevere in deepening reform, pursuing innovation in management and practice and rule of law in line with the requirements of the state pertaining to the development of housing provident fund system,further give play to the functioning of housing provident fund in aspects such as bolstering housing consumption and improving employees’ housing conditions.
1) continue implementation of differentiated provident fund credit policies
the municipality’s housing provident fund home loan policy was adjusted accordingly in november 2014 to comply with notice of pbc and cbrc on further improving financial services for real estate sector and notice on developing housing provident fund home loans released by ministry of housing & construction, ministry of finance and people’s bank of china. in 2015, the municipal provident fund center shall continue implementation of differentiated credit policies, take the initiative in bolstering residents’ rational self-occupying and improvement oriented housing consumption in tandem with working out measures such as easing the loan caps to further shore up low- and medium- income families’ home purchase and give full play to the functioning of the provident fund system. moreover, the municipal provident fund center shall steadily shift its loan guarantee means and establish new risk management and control mechanism for security of housing provident fund loans in wake of removal of institutional housing provident fund mortgage guarantee charges for cost reduction in employees’ housing consumption.
2) deepen cooperation with relevant entities in information sharing and take a slew of measures for housing provident fund system coverage outreach.
years of housing provident fund publicity and law enforcement inspection has prompted increased awareness in mandatory obligations of the entities in housing provident fund payment. in 2015, the municipal provident fund center shall further deepen information sharing cooperation with pertinent departments such as the municipal industry and commerce bureau, local taxation bureau and human resources and social security bureau to obtain timely information about liable entities and breaches for housing provident fund payment compliance monitoring. those entities declining to make corrective actions shall be publicized and punished by reporting such violation to the public credit information platform. a slew of measures shall be taken for housing provident fund system coverage outreach in coalition with various departments for safeguarding the legitimate rights and interests of the vast number of employees.
3) conduct implementation of further upgrading of housing provident fund withdrawal and use policies for compliance with the guidelines for bolstering paying employees’ diversified housing consumption.
in 2014, the center revised the measures on housing provident fund withdrawals due to rent or property service charges payment, elaborated relevant operational working instructions and eased the limits of withdrawal scope, sum and time. in 2015, the center shall monitor and evaluate the enforcement of housing provident fund withdrawal and use policies, ratchet up impetus for further expanding housing provident fund coverage in terms of its use and enhancing provident fund supported housing consumption to benefit more paying employees in compliance with the guidelines developed by the third session of the eighteenth committee of the cpc for improvement of housing provident fund withdrawal and use.
4) expand online services and new media services to provide more convenience to paying units and employees.
in 2015, the center shall explore innovative approaches to further development of online provident fund services aimed at accessibility and convenience for paying units and employees to conduct self services in office or at home with the aid of the internet, enhance functions of the cyberspace service hall for timely launch of services such as online remittance for monthly provident fund payment and online payment of arrears of provident fund, hasten the pace for construction of new media service platform commensurate with the growing trend of web-based and mobile applications in the sector of government affairs information services to provide more smooth and convenient service channels to accommodate the needs of both paying units and employees.
shanghai provident fund management center
february, 2015
