Comprehensive Guide to China’s Five Insurances and One Fund for Foreigners
Understanding China’s Mandatory Employee Benefit System
China’s social security system is built around the mandatory framework known as “Five Insurances and One Fund” (五险一金), a cornerstone of social protection in Mainland China. This statutory requirement consists of five social insurance programs and the Housing Provident Fund, forming a comprehensive social security package designed to safeguard employees.
All businesses operating in China—including foreign-invested enterprises—must comply by enrolling eligible Chinese and foreign employees who hold valid work permits. Failure to participate in China’s social security system may lead to serious penalties, such as fines equivalent to 100%–200% of overdue payments and additional legal consequences.
Employers should ensure full adherence to the Five Insurances and One Fund to avoid non-compliance risks and contribute effectively to China’s social security framework.
1. The Five Social Insurances: Coverage and Contributions
(1) Pension Insurance (养老保险)
A key component of China’s social security system, the Five Insurances and One Fund (五险一金), includes Pension Insurance (养老保险), which is mandatory for most employees. Here’s what employers and workers need to know:
- Purpose
Pension Insurance provides retirement pensions and survivor benefits to eligible participants.
- Contributions
-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.
- Eligibility for Foreign Employees
Foreign nationals working in China with valid permits must enroll. Upon permanent departure from China, employees can apply to withdraw the balance of their personal account, which consists of their personal contributions (8%) plus any accrued interest. The portion contributed by the employer (16%) enters the national social pooling fund and is non-refundable.
（2）Medical Insurance (医疗保险)
- Coverage: Hospitalization, outpatient services, chronic disease treatment, and designated drug costs.
- Contribution:
- Employer: 6–10% of salary (varies by city; e.g., Beijing: 9.8%, Shanghai: 10%)
- Employee: 2% + fixed fee (e.g., ¥10/month in Shanghai)
- Critical Note: Foreign employees leaving China may transfer medical insurance to home country systems if a bilateral social security agreement exists (e.g., with Germany, South Korea). Absent such agreements, only personal account balances are refundable.
(3) Unemployment Insurance (失业保险)
- Benefits: Up to 24 months’ living allowance post-involuntary termination (amount = local minimum wage × 70–90%).
- Contribution:
- Employer: 0.5–1.5% (e.g., Shanghai: 0.5%)
- Employee: 0.5%
- Foreign Employee Access: Benefit eligibility typically requires ≥1 year of contributions. Few foreign nationals claim this due to visa-linked employment termination.
(4) Work-Related Injury Insurance (工伤保险)
- Coverage: Medical costs, disability compensation, and survivor pensions for occupational injuries/illnesses.
- Contribution: 0.2–1.9% of salary (employer-only; industry-risk adjusted).
- Claim Process: Employers must report injuries to the HRSSBwithin 30 days. Foreign employees enjoy equal claim rights.
(5) Maternity Insurance (生育保险)
- Benefits: 98–128 days paid leave (region-dependent), prenatal care, and delivery cost coverage.
- Contribution: 0.8–1.2% of salary (employer-only).
- Foreign Employee Eligibility: Applies regardless of nationality. Male employees’ spouses may claim partial benefits.
2. Housing Provident Fund (住房公积金)
- Purpose: Facilitates home purchases, construction, renovations, or mortgage/rent payments.
- Contribution:
- Employer and Employee: Each contribute 5–12% of employee’s monthly average salary(locally capped; e.g., Shanghai 2024 cap: ¥31,068/month).
- Foreign Employee Policy:
| City | Enrollment Requirement | Contribution Basis |
| Shanghai | Mandatory | Actual salary |
| Beijing | Mandatory | Actual salary |
| Shenzhen | Voluntary | Negotiated (min. 5%) |
| Suzhou | Mandatory | Actual salary |
- Withdrawal for Departing Foreigners: Full account balance (employee + employer contributions + interest) is withdrawable upon permanent departure after presenting:
- Cancelled work permit
- Exit-entry administration departure record
- Tax clearance certificate
3. Critical Compliance Deadlines & Procedures for Foreign Employees
- Enrollment Timeline: Employers must register employees within 30 daysof work permit issuance.
- Pension Withdrawal Process:
[Step 1]: Cancel work permit/residence permit
[Step 2]: Obtain tax clearance certificate
[Step 3]: Submit withdrawal application + original passport at local Social Security Bureau
[Step 4]: Funds transferred within 15 working days (avg.)
- Medical Insurance Personal Account Refund: Requires separate application at Medical Insurance Management Center.
- Penalties for Non-Compliance:
- Late contributions: 0.05% daily interest on arrears
- Evasion: Fines up to 3× underpaid amounts (Social Insurance Law, Art. 86)
4. Practical Recommendations for Employers
For foreign nationals enrolled in China’s social security system—specifically the Basic Pension Insurance as part of the Five Insurances and One Fund—who permanently leave China (ceasing both work and residence), certain provisions allow for the withdrawal of their pension contributions. Below is a structured overview of the process and key considerations:
- Eligibility and Process
Qualified individuals may apply to withdraw the accumulated balance from their personal pension account, which includes their individual contributions plus any interest earned.
Required documents usually include:
– Valid passport
– Proof of termination of employment in China
– Evidence of permanent departure (e.g., cancellation of work permit/residence permit, or exit visa)
It is important to note that the portion of contributions made by the employer cannot be withdrawn and remains in the national social pooling fund.
- Key Practical Tips:
– Verify Local Policies: Contribution bases, rates, and withdrawal procedures can vary by city. Always consult the local Human Resources and Social Security Bureau (e.g., via 12333.gov.cn)for updated rules.
– Check Bilateral Social Security Agreements: To prevent dual social security contributions, confirm whether a totalization agreement exists between China and the employee’s home country (e.g., Germany, South Korea, Japan).
– Retain Contribution Records: Keep full records of all social security contributions for at least 15 years, as this is the standard statutory audit period in China.
Understanding these rules is essential for any foreign employee participating in China’s social security system and complying with the Five Insurances and One Fund requirements.
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