As a foreigner in China, the Chinese social insurance system can be different from your home country. In this article, Hongda will introduce all the important factors you should know about your social insurance in China!
With the development of globalization and the increase in international personnel mobility, the number of foreign employees working in China has been rising rapidly in the recent decades. To further protect the right of foreigners working in China, the Ministry of Human Resources and Social Security issued the ‘Interim Measures for Foreigners Employed in China to Participate in Social Insurance’ on September 6, 2011, which clearly states that all foreigners legally employed in China must have their social insurance purchased by their employers.
Globally, many developed and developing countries have enacted laws and regulations to treat foreign workers equally to domestic citizens by mandatorily including them in the national social insurance system, thus protecting the social insurance rights of foreign workers. Similarly, China provides national treatment to foreigners working in the country by allowing them to participate in Chinese social insurance.
In this blog, Hongda will introduce the social insurance system for foreigners working in China, so that you will get to know the necessity of purchasing social insurance in China!
1. The Removal of Company Supervisor(s)
According to related regulations (the ‘Interim Measures for Foreigners Employed in China to Participate in Social Insurance’; link here, in Chinese), foreign employees working in China can participate in social insurance only after obtaining the right to work and reside legally in China. In other words, foreign employees must possess employment documents such as a ‘Foreigner’s Work Permit’ and a ‘Foreigner’s Employment Residence Permit’ in China before they can purchase social insurance. Additionally, foreign employees dispatched by overseas headquarters to branches or representative offices registered in China are also required to participate in social insurance.
2. How Much Do I Need to Pay for the Social Insurance
China’s social insurance is divided into two parts: the employer’s contribution and the employee’s contribution. The amount paid by employees is typically withdrawn from their monthly wage and submitted by the employer on their behalf. In general, social insurance includes five different sections: pension insurance, medical insurance, unemployment insurance, work-related accident insurance, and maternity insurance. The detailed amounts for each item are determined as a proportion of the contribution base.
The contribution base is usually determined by the employee’s salary but is also subject to minimum and maximum limits. The contribution base is calculated based on a minimum of 60% of the average salary and capped at 300% of the average wage. The table below shows the specific contribution rates for each item (Take Shenzhen for an example here).
|
Insurance Items |
Employee Contribution Rate |
Employer Contribution Rate |
|
Pension Insurance |
8% |
15% |
|
Medical Insurance |
2% |
5% |
|
Unemployment Insurance |
0.2% |
0.8% |
|
Work-related Injury Insurance |
— |
0.2% to 1.9% (determined by the industry risk level) |
|
Maternity Insurance |
— |
0.5% |
3. How to Register Social Insurance
The employer takes the responsibility to register and purchase the social insurance for the foreign employees. You will be asked to provide the copies of documents including the passport, work permit, and residence permit according to the requirements of your employer. In general cases, your employer will register your social insurance on your behalf through online system and inform you about the social insurance number once completed.
If you have just formed a company in China, Hongda can assist you in registering the company social insurance account and setting up your social insurance management system, ensuring that social insurance purchases are available once your employees arrive!
4. Situations Where Foreigners are Exempt from Social Insurance
- Age exemption: Female foreign employees over 50 years old and male foreign employees over 60 years old are not required to pay social insurance.
- Foreigners from bilateral or multilateral agreement countries*: if your home country has signed social insurance contribution agreements with China, you will be exempt to pay specific social insurance items if you provide certificates from your home country within 3 months of obtaining the work permit.
*: To address the issue that foreign employees pay multi social insurance payments in both China and their home country China has signed agreements with relevant countries to provide specific exemptions from social insurance payments. As of now, China has signed bilateral social security agreements with 12 countries: Germany, South Korea, Denmark, Canada, Finland, Switzerland, the Netherlands, Spain, Luxembourg, Japan, France, and Serbia.
5. What Documents are Needed for Registering Social Insurance
- Copy of passport;
- Copy of foreigner’s work permit and residence permit;
- Photo;
- Other necessary documents;
6. Can I Transfer my Social Insurance to Home Country?
As China’s social insurance system is not integrated with any foreign system, you cannot transfer the social insurance balance in your own account to your home country. If you return to your home country, the social insurance balance will not be able to transfer but will remain in your own account.
However, your social insurance account will be retained if you leave China before retirement age, in case of re-employment in China. In addition, if you wish to terminate your social insurance relationship, you can withdraw the social insurance account balance once an application is submitted and approved.
Conclusion
As a foreigner working in China, understanding the basics of China’s social insurance is essential for protecting your own rights. We hope that after reading this blog, you have got information about social insurance system in China. On the other hand, if you have established your own company in China and employ Chinese or foreign staffs, purchasing social insurance for your employees is also a legal obligation as an employer. If you would like to learn more about human resource management and social insurance, you can visit our Payroll Service page or schedule a free consultation with us.
