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A General Guide About China Social Benefits
According to the Interim Measures for Social Insurance System Coverage of Foreigners Working within the Territory of China issued by the Minister of Human Resources and Social Security, starting from 2011, foreigners who are legally working in China have been required to participate in the social security system. In this article, TopTutorJob is going to show you a general guide about China social benefits.
Overview of Social Benefits in China
China social security system consists 5 types of insurance, including pension, medical, unemployment, work-related injury and maternity, plus a mandatory housing fund.
The social insurance is managed at a regional level. While most regions, such as Beijing, Tianjin, Shenzhen, Nanjing, Guangzhou, and Jiangsu etc., have made it mandatory for foreigners to contribute to five types of social insurances, some regions do not require it. For example, foreigners in Shanghai can opt out of paying social insurance and foreigners in Dalian only need to contribute to pension and medical insurance.
Besides, specific employees from the following countries that have agreements with China are eligible for social insurance exemptions, they are Germany, Korea, Denmark, Canada, Finland, Switzerland, the Netherlands, Spain, Luxembourg, Japan, and Serbia.
Contribution Rates of Social Benefits
For each benefit, the employee and employer contributions rates and bases differ, and are subject to annual changes and reforms. For example, the contribution rates in Tier 1 cities are different as follows:
2021 Employer Contribution Rates
| Social Insurance Type | Shanghai | Beijing | Guangzhou |
| Medical | 9.5% | 10% | 7% |
| Pension | 16% | 16% | 14% |
| Unemployement | 0.5% | 0.8% | 0.32%-0.8% |
| Work-related Injury | 0.16%-1.52% | 0.16%-1.52% | 0.1%-0.7% |
| Maternity | 1% | 0.8% | 0.9% |
| Housing Fund | 7% | 12% | 5%-12% |
2021 Employee Contribution Rates
| Social Insurance Type | Shanghai | Beijing | Guangzhou |
| Medical | 2% | 2% | 2% |
| Pension | 8% | 8% | 8% |
| Unemployement | 0.5% | 0.2% | 0.2% |
| Work-related Injury | N/A | N/A | N/A |
| Maternity | N/A | N/A | N/A |
| Housing Fund | 7% | 12% | 5%-12% |
How is the Contribution Base Calculated?
The amount of contribution in each category is calculated by utilizing the employees's payment base figure and multiplying it by different percentages required by each local government entity.
The social security contribution amount is determined by employee's average income in the previous year (January to December). For new employees, the starting salary may be used as the social security base during the first year.
*Social security contribution base = Total income of previous year / 12
The base figures for social security contributions have floors and ceilings. Generally, the maximum contribution base is capped at 300 percent of the average local salary, and the minimum contribution base is usually determined either by the local minimum wage, or certain percentage of the average local wage.
For example, in Guangdong province, the average salary was 6,338 yuan in 2018. The maximum contribution base is three times this amount, that is 19,014, while the minimum contribution base is 60 percent of this amount, which equals to 3,803 yuan.
How to deal with the account when leaving China?
According to the Interim Measures, if foreign employees leave China before the legal retirement age, their social insurance individual account will be retained. When they return to work in China, the account will be renewed on a cumulative basis. Foreign employees can apply to terminate their social insurance account before leaving China. The amount remaining in the account will be paid in full amount to the person.
For example, foreigners who work in Shanghai and participate in the social insurance system can withdraw savings from their individual social insurance accounts in one lump sum after the end of a labor relationship, no matter if they are leaving China or for other reasons. It is important to note that, the social insurance is contributed by both the employer and the employee, only employee's contribution can be withdrawn from the account.
Foreign employees should consult with their local Human Resources and Social Security Bureau to know more details about the specific application procedures for closing the social security account and withdrawing the balance of the account.
Usually, the bureau requires the foreign employees to bring relevant materials, which include the application form with personal signature or company stamp, labor relationship termination letter, passport, valid residence permit, and social security card, to suspend the social insurance account and enable withdrawal the balance.
TopTutorJob will discuss more about the China social security system in the next article, please stay tuned! If you have any concerns regarding the social security system in China, please sign in to leave your comments.
