[Q&A] Enterprise Annuity: Suspending Retiree Payments
2025. 11. 13
Question: Can a company suspend the payment of enterprise annuity to retired employees? Does such a dispute fall within the scope of labor dispute arbitration?
Answer: No, it cannot. The funds in the enterprise annuity individual account are the private property of the employee, and the employer does not have the right to unilaterally withhold or reduce them. Generally, such a dispute does not fall within the scope of labor dispute arbitration.
Regarding the nature of the enterprise annuity, it is a supplementary pension insurance system voluntarily established by the enterprise and its employees. According to Chapter 3 of the "Measures for Enterprise Annuity," it is funded by both the enterprise and the employees, building upon the basic pension insurance. The funds within the individual account (including the portion contributed by the enterprise and credited to the individual account, as well as its investment returns) legally belong to the individual employee—it is a property right enjoyed by the employee under the law. When an employee reaches the legal retirement age or under other specified circumstances, they can receive payments from their enterprise annuity individual account on a monthly, periodic, or lump-sum basis.
The enterprise has no right to claim "withholding" or "freezing" any part of the funds in the individual account. Similarly, the enterprise cannot arbitrarily suspend or interfere with the annuity payment process due to other disputes with the employee, as doing so would constitute an infringement of the employee's lawful rights and interests.
Furthermore, the enterprise annuity fund must be managed separately from the own assets or other assets of the contributors, trustees, account managers, investment managers, custodians, and other natural persons, legal persons, or organizations that provide services for the management of the enterprise annuity fund. It must not be misappropriated for other purposes. Therefore, if an enterprise misappropriates the enterprise annuity fund without authorization, it shall bear corresponding legal liability.
According to the "Measures for Enterprise Annuity," if a dispute arises from the performance of an enterprise annuity fund management contract, the parties may apply for arbitration or initiate legal proceedings in accordance with the law. Moreover, as the rights related to the enterprise annuity originate from the annuity plan itself, not the labor contract, such disputes do not fall within the scope of labor and personnel dispute arbitration. The parties can directly initiate arbitration based on the terms of the annuity fund management contract or file a lawsuit with the People's Court.
In practice, the (2025) Su 12 Min Zhong No. 560 judgment clarified that the employer, as the contributor, unilaterally demanding the trustee institution to suspend the payment of the employee Wu's enterprise annuity without just cause infringed upon Wu's lawful rights and interests. Consequently, the court ruled that the employer must continue fulfilling the remaining enterprise annuity payment plan.
In light of this, we remind employers to pay attention to the following when managing enterprise annuities:
1.Distribute the enterprise annuity in accordance with the law, avoiding "imposing restrictions" or "withholding."
The funds in the enterprise annuity individual account belong to the employee's private property and must not be frozen in disguise due to internal disputes or other economic interactions. Once an employee meets the withdrawal conditions, the funds in the enterprise annuity account should be distributed lawfully, timely, and in full according to the contract.
2.The entrustment relationship shall be clear; the primary responsibility cannot be avoided.
Even if the actual distribution of the enterprise annuity is executed by a trustee institution, the enterprise, as the contributor and entrusting party, still bears the obligation to ensure distribution.
3.If an enterprise encounters situations such as operational losses, restructuring, or mergers where it cannot continue contributions for the current period, it must negotiate with the employees before contributions can be suspended.
Once the circumstances preventing continued contributions cease to exist, the enterprise and employees should resume contributions. Furthermore, depending on the actual situation of the enterprise, contributions may be made up for the period and amount of the suspension, based on the enterprise annuity plan in effect at the time of the suspension.