An Introduction to the Chinese An Introduction to the Chinese Social - PowerPoint PPT Presentation

An Introduction to the Chinese An Introduction to the Chinese Social Security System and the Social Security System and the Participation of Foreigners Adam Livermore Manager – Payroll & HR Admin Dezan Shira & Associates

Agenda Agenda I. The Social Security System in China y y a. Pension b. Medical Insurance c. Unemployment Insurance d. Work ‐ related Injury Insurance e e. Maternity Insurance Maternity Insurance II. Obligations for the Employer g p y III. Explanation of the Benefits that can be Claimed p a a o o e e e s a ca be a ed IV. IV. Issues Relating to Impending Participation of Foreigners Issues Relating to Impending Participation of Foreigners 2 www.dezshira.com

Section 1 The Social Security System in China The Social Security System in China • Explanation of Component Elements • Explanation of Component Elements • Detailed Calculations Using Examples Detailed Calculations Using Examples www.dezshira.com 3

Pension Pension Employer Employer Employee Employee • 12 ‐ 22% of monthly salary • 8% of salary to be % y to be contributed contributed Based on average salary of the - • Go to personal pension Go to “personal pension company company • Go to a public pool account account” • Individuals need to make contributions for a minimum of 15 accumulative years before claiming pension • • Retirement age: Retirement age: • Blue collar: 55 men │ 50 women • White collar: 60 men │ 55 women │ www.dezshira.com 4

Medical Insurance Medical Insurance Employer Employer Employee Employee • 5 ‐ 12% of monthly salary • 2% of salary to be contributed ib d to be contributed • • Go to a public pool account Go to “personal” account Administered through Administered through - Used for inpatient costs Used for inpatient costs - medical treatment card • Medical Insurance Fund will refund medical expenses to the hospital that carries out the treatment • Patients will no longer have to pay treatment fees upfront and wait for compensation later compensation later • Medical Insurance only covers treatments administered in government ‐ approved hospitals and clinics (this excludes “international clinics”) www.dezshira.com 5

Unemployment Insurance Unemployment Insurance Employer Employer Employee Employee • 0.2 ‐ 2% of monthly salary to • < 1% of salary to be contributed be contributed • • Obligated to provide Unemployment benefit can be claimed for a maximum be claimed for a maximum “ Termination of Employment ” “ Termination of Employment ” period of 24 months after evidence within 15 days of unemployment release release • The amount of benefit received is not related to the salary previously received or the premiums paid p p www.dezshira.com 6

Work Related Injury Insurance Work ‐ Related Injury Insurance Employer Employer Employee Employee • 0.5 ‐ 2% of monthly salary % y y to be contributed No contribution No contribution • Insurance company will Insurance company will reimburse company for cost of treatment • Work ‐ related Injury Insurance removes requirement of the Work related Injury Insurance removes requirement of the employer to pay for an employee’s treatment - Some salary must still be paid during period of recuperation - If the employee cannot return to work compensation must be paid www.dezshira.com 7

Maternity Insurance Maternity Insurance Employer Employer Employee Employee • 0.5 ‐ 1% of monthly salary to be contributed ( male and be contributed ( male and female staff ) • Covers: No contribution No contribution • Cost of salary • Cost of childbirth (fixed sum) sum) • Monthly payments from the insurance fund to women during their maternity leave will be made based on the average salary paid by the company to its employees • This benefits employers because, during the period of maternity, salary is not s be e s e p oye s because, du g e pe od o a e y, sa a y s o required to be paid. Payment is instead funded by the insurance 8 www.dezshira.com

S Social Insurance Figures ‐ BEIJING i l I Fi BEIJING Contribution Base RMB 1,680 - RMB 12,603 Contribution Range (Average social salary RMB 4,201) RMB 139.2 – 1,513 Work-related Pension Unemployment Maternity Medical Housing Fund injury C I C I C I C I C I C I 2%+3 20% 20% 8% 8% 1% 1% 0.2% 0.2% 0.8% 0.8% N/A N/A 0.5% 2% 0.5%- 2% N/A N/A 10% 10% 12% 12% 12% 12% RMB RMB C = Company (32 3% ‐ 33 8%) ; I = Individual (10 2% + 3 RMB) C = Company (32.3% ‐ 33.8%) ; I = Individual (10.2% + 3 RMB) www.dezshira.com 9

S Social Insurance Figures ‐ Shanghai i l I Fi Sh h i Contribution Base RMB 1,680 - RMB 11,688 Contribution Range (Average social salary RMB 3,896) RMB 2,337-12,603 Work-related Pension Unemployment Maternity Medical Housing Fund injury C I C I C I C I C I C I 22% 22% 8% 8% 2% 2% 1% 1% 0.5% 0.5% N/A N/A 0.5% 2% 0.5%- 2% N/A N/A 12% 12% 2% 2% 7% 7% 7% 7% C = Company (37% – 38 5%) ; I = Individual (11%) C = Company (37% 38.5%) ; I = Individual (11%) www.dezshira.com 10

Employer Mandatory Benefit Calculation Employer Mandatory Benefit Calculation • Social Insurance Base Employee based in Beijing p y j g Insurances Min. Limit Max. Limit • Monthly salary RMB 20,000 (RMB) (RMB) • Base salary used for contribution is y Pension 1,680.00 12,603.00 Unemployment 1,680.00 12,603.00 the upper limit ‐ RMB 12,603 Work ‐ Related Injury 1,680.00 12,603.00 • Maximum Employer contribution M t Maternity it 2 521 00 2,521.00 12,603.00 12 603 00 (Beijing) – 33.8% Medical 2,521.00 12,603.00 Pension Medical Total Cost for Employer @ 10 % = @ 20% = 20,000 + 2,520.60 + Unemploy. RMB 2,520.60 RMB 1,260.30 @ 1% = @ 1% 1,260.30 + 378.09 + RMB 126.03 Work Injury Maternity 100.82 + 126.03 @ 3% = @ 0.8% = = RMB 24,385.84 RMB 24 385 84 RMB 378.09 RMB 100.82 www.dezshira.com 11

Employee Mandatory Benefit Calculation Employee Mandatory Benefit Calculation Social Insurance Base • Expatriate working in Beijing earning Expatriate working in Beijing earning Insurances Min. Limit Max. Limit RMB 20,000 per month (RMB) (RMB) • Base salary used for contribution is the Pension Pension 1 680 00 1,680.00 12 603 00 12,603.00 upper limit ‐ RMB 12,603 Unemployment 1,680.00 12,603.00 • Work ‐ Related Injury 1,680.00 12,603.00 Maximum Employee contribution Maternity 2,521.00 12,603.00 (Beijing) – 10.2% + RMB 3 Medical 2,521.00 12,603.00 Taxable Salary for Pension Unemploy. Medical Employee p y @ 8% = @ 0.2% = @ 2% + RMB 3 = RMB 1,008.24 RMB 25.21 RMB 255.06 20,000 – 1,008.24 – 25.21 – 255.06 = RMB 18,711.49 www.dezshira.com 12

M Mandatory Benefit Calculation based on Removed Caps d t B fit C l l ti b d R d C Same scenario as before but let us remove the caps… • Expatriate working in Beijing earning RMB 20,000 per month • Maximum Employer contribution (Beijing) – 34.8% • Maximum Employee contribution (Beijing) – 10.2% + RMB 3 Pension Medical Total Cost for Employer p y @ 10 % = @ 10 % @ 20% = @ 20% Unemploy. 20,000 + 4,000 + 2,000 + 600 + RMB 4,000 RMB 2,000 @ 1% = 160 + 200 Work Injury Maternity RMB 200 = RMB 26 960 = RMB 26,960 @ 3% = @ 0.8% = RMB 600 RMB 160 Net Salary for Employee Pension Unemploy. Medical 20,000 – 1,600 – 40 – 403 @ 8% = @ 0.2% = @ 2% + RMB 3 = RMB 1 600 RMB 1,600 RMB 40 RMB 40 RMB 255 06 RMB 255.06 = RMB 17,957 RMB 17 957 www.dezshira.com 13

Section 2 Obligations for the Employer • Setting up accounts for company and individuals • Withholding and making contributions • Additional obligations not covered by social insurance Additional obligations not covered by social insurance • Penalties for non ‐ compliance www.dezshira.com 14

Company Social Security Account Set Up: Beijing Company Social Security Account Set Up: Beijing 1. Collect Documentation 2. Deliver Employee Information to Business License Social Insurance Bureau Enterprise Code Certificate All documents and info, originals and hard Certificate of Approval and electronic copies (to be saved onto a USB p ( ID of Legal Representative (Passport) ID of Legal Representative (Passport) key) to be physically taken to the bureau Social Insurance Information Collection Form 4. Complete Bank Contract p 3. Receive Account Number Ensures that the monthly social security and Electronic Certificate contributions can be directly remitted to the social insurance bureau each month Within 15 days social welfare account Within 15 days social welfare account number displayed on social welfare bureau website 5. Update Account Fill out “Setup Application Form” which p pp includes account number and pay RMB260 Documentation for new hires must be for electronic certificate submitted physically to the bureau Register employees online Deregistration of terminated employees can be done online www.dezshira.com 15