China's Social
Insurance System
Comprehensive Guide
Foreigners Working in China Must Read
-HACOS-
Foreword
As China continues to deepen its opening-up, an increasing number of foreign nationals are choosing to work and develop their careers in China.
Understanding and legally participating in China's social insurance system is not only a necessary step to comply with Chinese law but also a crucial way to safeguard your rights and interests while working and living in China.
This article provides a comprehensive analysis of the relevant policies.
What is China's
social insurance?
China's Employee Social Insurance is a mandatory social insurance system designed to provide workers with basic living and medical coverage. It is commonly referred to as the “Five Insurances.”
01
Pension Insurance
Upon reaching the statutory retirement age and having accumulated at least 20 years of contributions, you may receive a monthly pension to support your basic living expenses after retirement. The portion in your personal account remains permanently yours.
02
Medical Insurance
Covers most outpatient and inpatient medical expenses, reducing the financial burden of healthcare. After enrollment, you use your electronic social security card for registration and payment at designated hospitals.
03
Unemployment Insurance
In cases of involuntary unemployment and upon meeting eligibility requirements, individuals may receive monthly unemployment benefits and access retraining support for reemployment.
04
Work-Related Injury Insurance
Provides medical treatment, financial compensation, and occupational rehabilitation benefits for injuries sustained during work hours or due to work-related causes, as well as for occupational diseases. All costs are fully covered by the employer.
05
Maternity Insurance
Coverage for maternity medical expense reimbursement and maternity allowance during maternity leave for female employees. Currently, most regions have integrated these benefits into the unified medical insurance collection system.
/ Policy Basis
Who is required to participate in China's social insurance?
According to China's Social Insurance Law and relevant regulations issued by the Ministry of Human Resources and Social Security, all foreign employees who establish labor relations with employers within China shall participate in employee social insurance in accordance with the law starting from October 2011.
◆
Applicable to:
Foreign nationals legally employed within China who hold valid documents such as a Foreigner Work Permit or Foreign Correspondent Permit.
◆
Obligated Parties
for Insurance Enrollment:
Both employers and foreign employees are obligated to enroll in insurance programs, with premiums shared proportionally by both parties.
Important Notice
Countries that have signed bilateral social insurance exemption agreements with China (such as Germany, South Korea, Japan, Canada, etc.) may exempt specific personnel from the obligation to pay contributions for certain insurance types under the terms of the agreement.
A Certificate of Social Insurance Coverage must be provided. Please verify with your employer or the local social security administration agency.
/ How to calculated?
What is the cost of insurance premiums?
The amount of social insurance contributions = contribution base” × “contribution rate.
01
Contribution Base
Typically your average monthly salary from the previous year.
Minimum and maximum thresholds are established in various regions(generally 60% to 300% of the local average wage).
02
Contribution Ratio
The following are the current contribution standards for Guangzhou social insurance, provided for reference.
◆
Pension Insurance
Employer: Contributes 16% of the employee’s monthly salary (based on the national baseline; rates may vary by province, e.g., 14% in Guangdong).
Employee: Contributes 8% of their monthly salary.
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Medical Insurance
Employer: 6% of salary.
Employee: 2% of salary.
◆
Unemployment Insurance
Employer: 0.8% of salary.
Employee: 0.2%of salary.
◆
Work-Related Injury Insurance
Employer-only:0.2-1.4% of salary.
◆
Maternity Insurance
Employer-only: 0.85% of salary.
Assuming a foreign employee works in Guangzhou with a monthly salary of 50,000 yuan. The upper limits for individual social insurance contribution bases in Guangzhou are as follows:
1. Pension Insurance: 27,549 yuan
2. Medical Insurance: 31,170 yuan
3. Unemployment Insurance: 41,112 yuan
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The employee's monthly social insurance expenditure is:
27549×8%+31170×2%+41112×0.2%
=2909.544(yuan)
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The employer's monthly social insurance expenditure is:
27549×16%+31170×6%+41112×0.8%
=6606.936(yuan)
Regarding work-related injury insurance, since premium rates are tiered based on industry risk levels, common rates include 0.2%, 0.4%, 0.6%, 0.8%, 0.9%, 1.0%, 1.2%, and 1.4%. Therefore, each case requires individual analysis.
Maternity insurance is implemented in conjunction with basic employee medical insurance, so the contribution base is uniformly determined according to the standards of basic employee medical insurance.
Note:The contribution base is normally capped at 300% of the Region/City Average Salary of the preceding year and adjusted annually or on needed basis.
How to use these social insurance programs?
01
Medical Insurance
When visiting a designated local medical institution for treatment, simply present your electronic social security card for real-time settlement. Individuals are only required to pay their out-of-pocket portion.
02
Pension Insurance
& Unemployment Insurance
After meeting the eligibility requirements (retirement or unemployment), you must proactively apply to the social security administration agency to complete the necessary procedures.
03
Work-Related Injury Insurance
& Maternity Insurance
When relevant circumstances arise, the employer shall apply for the benefits on behalf of the individual.
Important Notice
After joining the company, the employee should promptly cooperate with the employer to apply for an electronic social security card and familiarize yourself with the local list of designated medical insurance hospitals.
"Electronic Social Security
Card" application process
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How to handle your
social insurance
when leaving China?
Upon leaving China after resignation, you have the right to handle your social security account in accordance with the law.
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Personal Pension Account:
You may withdraw the entire balance in a lump sum. After completing departure and resignation procedures, you may apply through your former employer or directly to the social security administration agency to withdraw the full accumulated amount in your personal account (i.e., the 8% portion you personally contributed plus accrued interest).
◉
Medical Insurance
Personal Account:
The balance can also be withdrawn in a lump sum.
◉
Other Insurance Types:
Contributions to unemployment insurance, work-related injury insurance, and maternity insurance serve a pooled protection function and cannot be withdrawn unless the corresponding circumstances occur.
◆
Brief Overview of the Process:
Obtain the cancellation certificate for the Foreigner Work Permit.
The employer must process the suspension of social insurance contributions.
Present your passport, eSScard, bank account information, and other required documents at the Social Insurance Service Center to apply for account closure and withdraw funds.
Epilogue
Participating in China's social security system is a crucial step for foreign nationals to establish roots in China and work with peace of mind. It not only provides tangible protection but also demonstrates respect for China's laws and institutions.
HACOS recommends that you clarify social insurance contribution arrangements with your employer upon joining the company, and pay attention to relevant contribution records during your employment period.
Disclaimer: This article is compiled based on current general policies. Specific implementation details may vary by city. Before making any decisions, please consult your local Human Resources and Social Security Bureau or a professional tax and HR service provider to obtain the most authoritative and up-to-date information.
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