What contributions are calculated on
Step 1 / 3·Floor, ceiling and the reference level
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Learning objectives — after this module you will:
- Understand the floor and ceiling of the contribution base
- Determine which pay components join the base and which do not
- Re-examine your company's pay structure against the new rules
Floor, ceiling and the reference level
Grasp how the limits of the contribution base are set.
The 2024 law sets the salary used as the base for mandatory social insurance at a minimum of the REFERENCE LEVEL and a maximum of 20 TIMES the reference level at the time of contribution.
The novelty is the concept of a 'reference level'. Previously many social insurance figures were pegged to the 'base salary', a quantity tied to the public sector. Moving to a reference level decouples the insurance system from the base-salary mechanism and allows more flexible adjustment in line with economic conditions.
Why HR must track this number
The reference level is adjusted from time to time. Each adjustment moves both the floor and the ceiling — meaning anyone contributing near either boundary sees their contribution change. Put a periodic review in the calendar rather than waiting for the social insurance agency to raise it.
Key takeaway: Floor = the reference level, ceiling = 20x the reference level; the reference level replaces the old base-salary peg.