FAQ – Expatriates in the Territory of China Participating in Social Insurance
Q: Do expatriates need to pay social insurance premium in China?
A: Previously no expatriates were required to pay social insurance premium in China. However, with the issuance of the Interim Measures for the Participation in Social Insurance of Foreign Employed in China (“Measures”) in September, 2012, the most of the foreign employees working in China have been involved in the scheme of social insurance of China now.
Q: Do the Measures cover all foreign employees in China?
A: Pursuant to the Measures the eligible foreigners include those who:
1) having obtained the employment certificates (e.g. the Employment Certificate for foreigners or the Foreign Expert Certificate) and the Residence Certificate for foreigners.
2) holding the Permanent Residence Permit and employed in the territory of mainland China.
Q: Do the foreign employees have to pay the social insurance premium in China provided they are already covered in the social insurance program in their host country?
A: For a foreigner of the nationality which has signed any bilateral or multilateral agreement/covenant on contribution of social insurance premium with China, if he/she is able to provide proof in participating in the social insurance program in the host country within 3 months after obtaining the employment certificate, he/she shall be exempted from the obligation of such payment.
Q: What is the treatment of the foreigners who enter into employment agreement with the headquarters outside China and dispatched to the subsidiary, branch or representative office in China (jointly referred to as “domestic entity”)?
A: They are likewise involved, and the domestic entity is to pay the part supposed to be undertaken by the employer.
Q: Is the participation compulsory? Are the any timelines to meet?
A: Yes, it is compulsory. The employer is required to complete the social insurance registration for the foreigners within 30 days after the employment certificate is obtained. If the employer might be subject to a fine of 1-times the amount of social insurance payable when failing to file the registration.
Q: What is the coverage of the social insurance?
A: The social insurance covers retirement insurance, unemployment insurance, vocational injury insurance, medical insurance and maternity insurance.
Q: How much shall be paid for the premium and who is supposed to pay?
A: The premium is computed based on the monthly taxable income of the employee and shall be contributed by the employer and employee in proportion. The detailed contribution proportion may vary in different areas. Take Beijing as example, the proportion to be contributed by the employer and employee account for 33% and around 10% of the taxable income which subject to the ceiling amount (3 times of the local averaged monthly income of the previous year).
Q: Can an expatriate collect the premium when leaving China upon termination of the employment?
A: Where an expatriate leaves China before reaching the age for receiving pension, he/she may choose to retain the social insurance account, whereby the contributed period shall be calculated cumulatively when he/she returns to China for employment later on; or to collect to balance in the account by filing a written application for termination of the social insurance relationship.