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Benefits and Entitlements Overview

Learn about mandatory and optional employee benefits in China

Mandatory benefits

In China, the social security system provides a comprehensive safety net for employees through mandatory benefits. These benefits are funded by contributions from both employers and employees according to a set percentage of the employee's salary. The exact contribution rates may vary by location, but the core benefits remain consistent nationwide.

5+1 Social Insurance System

China's social security system follows a "5+1" structure, encompassing six mandatory insurances. Here's a breakdown of each:

Pension Insurance

This program contributes towards an employee's retirement income. Both employers and employees contribute a portion of the salary, which is pooled and used to pay out pensions to retirees.

Medical Insurance

This insurance covers a significant portion of medical expenses incurred by the employee, including hospitalization, outpatient care, and medication costs. Maternity insurance is often combined with medical insurance for simplified administration.

Unemployment Insurance

This program provides temporary financial assistance to employees who lose their jobs involuntarily.

Work-related Injury Insurance

This insurance offers comprehensive protection for employees who suffer work-related injuries or illnesses. It covers medical expenses, rehabilitation costs, disability benefits, and even death benefits for dependents.

Maternity Insurance

This insurance provides financial support to expecting mothers during pregnancy and childbirth. It covers maternity leave pay and medical expenses associated with childbirth.

Housing Fund

The "+1" in the 5+1 system refers to the Housing Fund. This program helps employees save for a down payment on a house. Both employers and employees contribute to the fund, and employees can access the accumulated amount when purchasing a home.

Contribution rates and specific benefits may vary slightly depending on the municipality or region. Employers are responsible for withholding the employee's portion of contributions from their salary and remitting the total contribution (employer and employee portions) to the relevant social security administration.

Optional benefits

Many employers in China offer attractive optional benefits to recruit and retain top talent. Here's a look at some of the most common perks that Chinese employees value:

Financial Security and Well-being

  • Supplementary Medical Insurance: Government-sponsored medical plans can have limitations in coverage. To bridge this gap, employers may offer supplemental health insurance that covers a wider range of treatments, medications, and hospitals.
  • Life Insurance: While work-related injury insurance offers some protection, it doesn't cover death caused by illness. Employers may provide life insurance to provide additional financial security for the employee's dependents.
  • Annual Bonuses: A 13th-month bonus paid around Chinese New Year is a common practice in China, although not mandated by law. Competitive companies may offer bonuses exceeding one month's salary.
  • Allowances: Many employers offer allowances to offset employee living expenses. These can include food allowances, transportation allowances, and housing allowances.

Time Off and Work-Life Balance

  • Additional Paid Time Off: China's statutory minimum is 10 paid vacation days per year. Companies may offer additional paid leave to enhance employee well-being and attract talent, particularly during peak work seasons.

Wellness and Lifestyle Benefits

  • Meal Subsidies or Free Meals: Companies may offer subsidized meals at the workplace canteen or provide meal vouchers to help employees save on lunch expenses.
  • Gym Memberships or Fitness Programs: Companies aiming to promote employee health may offer subsidized gym memberships or on-site fitness facilities.

Beyond these common perks, some companies may provide additional benefits to stand out in the competitive job market. These can include:

  • Language training
  • Company outings and social events
  • Relocation assistance
  • Flexible work arrangements
  • Educational reimbursement

The specific benefits offered will vary depending on the company size, industry, and location. However, by understanding these popular perks, you can gain valuable insight into what motivates and attracts employees in the Chinese job market.

Health insurance requirements

Health insurance is a crucial part of China's social security system, providing protection for employees against unforeseen medical costs. It's vital for both employers and employees to comprehend the health insurance requirements in China.

Mandatory Health Insurance for All Employees

In China, health insurance coverage is mandatory for all employees, whether full-time or part-time. This rule applies to both Chinese citizens and foreign employees legally working in the country. Employers are legally obliged to register their employees in the health insurance program and make the necessary contributions along with the employee's share.

The health insurance program covers a substantial portion of medical expenses, including:

  • Hospitalization costs
  • Outpatient care
  • Medications within a specific formulary

The precise coverage details and limitations may slightly differ depending on the specific region.

Contribution Rates and Sharing

Health insurance contributions are a shared responsibility between employers and employees. The exact contribution rate can vary depending on the municipality or region, but it typically falls within a range of 2% to 12% of the employee's salary, with both the employer and employee contributing a portion.

Here's a breakdown of the contribution structure:

  • Employer Contribution: Employers contribute a mandated percentage of the employee's salary towards health insurance.
  • Employee Contribution: Employees also contribute a designated percentage of their salary towards health insurance, deducted directly from their paycheck.

The specific contribution rates are determined by the local social security administration and can be subject to change. Employers are obligated to stay updated on the prevailing contribution rates to ensure they comply with regulations.

Choosing a Health Insurance Plan

While health insurance is mandatory, employees may have some options within the system. Some localities might offer a choice between different plans with varying coverage levels and contribution rates. Employees should consult with their HR department or the local social security administration to understand their specific plan options.

Retirement plans

China's workforce is undergoing a significant demographic shift with a rapidly aging population. To address this challenge, the country has established a multi-layered retirement plan system to provide financial security for employees after they retire.

Public Pension (基本养老金 jī běn yǎng lão jīn)

The public pension serves as the foundation of China's retirement plan system. It functions on a pay-as-you-go basis, where current worker contributions fund the pensions of current retirees.

Eligibility and Benefits:

  • Eligibility: Employees become eligible for the public pension upon reaching the official retirement age (typically 60 for men, 55 for female white-collar workers, and 50 for female blue-collar workers) and accumulating a minimum number of contribution years (usually 15 years).
  • Benefits: The amount of the public pension benefit is calculated based on factors like average lifetime salary, total contribution years, and local average wages. Generally, the benefit replaces a portion of the employee's pre-retirement income.


The public pension system faces challenges due to the aging population. The ratio of working contributors to retirees is decreasing, placing strain on the system's sustainability. Additionally, the public pension alone might not be sufficient to maintain a comfortable standard of living after retirement.

Enterprise Annuity (企业年金 qǐ yè nián jīn)

The enterprise annuity is a supplementary pension plan offered by some employers. Employers can choose to participate and contribute on behalf of their employees. Employees can also make voluntary contributions to boost their retirement savings.


  • Increased Retirement Income: Enterprise annuities provide an additional source of income on top of the public pension, potentially improving an employee's financial security in retirement.
  • Tax Advantages: Contributions to enterprise annuities are often tax-deductible, incentivizing both employers and employees to participate.


Participation in enterprise annuities is not mandatory and depends on the employer's offerings. Employees should carefully evaluate the specific plan details and contribution options before enrolling.

Personal Pension (个人养老金 gé rén yǎng lão jīn)

China recently launched a pilot program for a personal pension plan to further encourage individual retirement savings. This plan allows individuals to invest their own funds into government-approved investment products specifically designed for retirement purposes.


  • Investment Flexibility: The personal pension plan offers individuals more control over their retirement savings by allowing them to choose from various investment options.
  • Potential for Higher Returns: Personal pension investments might offer the potential for higher returns compared to the traditional public pension system.


The personal pension plan is a relatively new initiative, and its long-term impact remains to be seen. Individuals considering this option should thoroughly research the available investment products and understand the associated risks.

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