Housing Provident Fund no longer serves its intended role

IN SHANGHAI, just 30 percent of those applying to the Housing Provident Fund for low-interest loans are low-income employees, while the percentage of middle-income applicants is much higher. Beijing Youth Daily commented on Wednesday:

That more people with middle-incomes rather than low-incomes are applying to the Housing Provident Fund for loans to purchase an apartment seems to go against the design of the fund.

The government introduced the Housing Provident Fund in Shanghai in 1991, requiring all employees of State-owned enterprises to contribute a proportion of their salaries to the fund with employers contributing a similar amount. Workers are allowed to withdraw their savings from the fund when they retire, alternatively they can use the money to purchase homes in the private housing market. They can also apply for low-interest loans from the fund to buy property.