Foreigners who work in China need to participate in the social insurance scheme, which includes the basic pension insurance for employees. Foreign employees, therefore, have raised certain questions, such as why they need to contribute to pension insurance, what the statutory age is for receiving pensions in China, and how they can apply for refund of pensions when leaving the country.
This article explores three ways that foreigners can deal with their social insurance individual accounts when leaving China, as well as explaining the procedure for foreigners in Shanghai to apply for a pension insurance refund.
Retention, termination and succession of social insurance individual accounts
The Interim Measures for the Participation in Social Insurance of Foreigners Employed in China (Interim Measures) released by the Ministry of HR and Social Security in 2011stipulatehow foreignerscovered in China's social insurance scheme are entitled to benefits of pension insurance.
According to the Social Insurance Law and the Interim Measures,foreigners who contribute to China's social insurance scheme and meet the statutory requirements for receiving pensions can enjoy pension insurance benefits in accordance with the law.
The Interim Measures also stipulate that foreigners who leave China before reaching the statutory age for receiving pensions, shall retain their social insurance individual accounts. If they return to work in China again, the number of years of contribution shall be calculated on a cumulative basis.
For foreigners who terminate their contribution to social insurance scheme by a written application, the balance of their individual accounts of pension insurance can be refunded in a lump sum. In the event of a foreigner's death, the balance of their social insurance individual accounts can be succeeded according to the law.
In short, there are three ways for foreigners to deal with their social insurance individual accounts when leaving China: namely retention, termination and succession.
How can foreigners in Shanghai apply for pension insurance refund?
The 'Circular of the Shanghai Municipal Bureau of Human Resources and Social insurance on the Issues of Aliens, Overseas Permanent (Long-term) Residency Holders, and Residents from Taiwan, Hong Kong and Macao Who Are Working in Shanghai to Participate in the Urban Social Insurance Scheme' (also known as Document No. 2009-38) expired on 15 August 2021 (please refer to the article Shall foreigners in Shanghai contribute to social insurance for more information).
As a result, foreigners who work in Shanghai now have to participate in China's social insurance scheme. This includes the basic pension insurance for employees, basic medical insurance for employees, work-related injury insurance, unemployment insurance, and maternity insurance.
Here, we provide foreign employees in Shanghai with an overview of how to terminate their social insurance individual accounts when leaving China, as well as listing the procedures of how to apply for a one-time balance refund of pensions from social insurance individual accounts. What is noticeable is that the remaining funds after the liquidation of the medical insurance individual accounts are also within the scope of a social security refund.
According to the provisions in Shanghai Municipality, foreign citizens, personnel with permanent (long-term) residency of other countries and residents from Taiwan, Hong Kong and Macao working in Shanghai (under the age of 60 for males and under the age of 55 for females) who dissolve or terminate their employment relationship with employers in Shanghai and leave China may apply for termination of the basic pension insurance from the 5th to the 26th of each month (excluding public holidays) at the social insurance administrative agency in the corresponding districts.
Applicants can be the foreign employee themselves, the employer, or an authorised third party. When the social insurance administrative agency receives the application for terminating a pension insurance account, they will inform the applicant in a written form about their rights to retain their social insurance individual account and the consequences of terminating a pension insurance account.
Once receiving written confirmation from the foreign employee, the social insurance administrative agency will officially terminate the pension insurance account.
The social insurance administrative agency will return the remaining fund (excluding the amount and interest converted from employee's years of service which was recorded before 1992) to the applicant's pension insurance account in one lump sum after 30 calendar days.
If foreign employees apply for termination of pension insurance account in person, they need to prepare the following materials:
- Relevant supporting documents for dissolution or termination of the labor (employment) relationship with employers
- A declaration form signed by the applicant for terminating the pension insurance account (this is exclusive for foreigners from other countries, and residents from Hong Kong, Macao and Taiwan)
- Domestic real name authorised personal bank account details: original and copy of bank card
- Their original passport
- The translated version of their passport with stamp of translation company
- The employee's medical insurance card (if the applicant has never applied for the card, they need to submit a written statement)
If employers apply for termination of a social insurance account on behalf of their foreign employees, they need to provide the corporate bank account details for receiving the funds.
If an authorised third party applies for termination of social insurance account on behalf of foreign employees, the authorised person needs to provide their original ID card and an authorised letter from the foreign employee.
After completing the above procedures, applicants need to go to the municipal medical insurance agency to apply for the cancellation of individual medical insurance account. The district and county medical insurance office will liquidate the balance of the individual medical insurance account according to the regulations. After liquidation, the remaining funds would be returned to the applicant in cash.
The following documents are required for cancelling individual medical insurance accounts:
- Pension Insurance Termination Approval Form
- The original passport
- The original medical insurance card (for those who have never applied for a medical insurance card can apply for it on the spot for subsequent liquidation procedures)
- The employer's corporate bank account details (only if choosing bank transfer)
- The original ID card of the authorised person
The method of receiving the remaining funds from the medical insurance account is different from that of the pension insurance account. The remaining funds in medical insurance account cannot be directly remitted to foreign a employee's personal bank account, regardless of whether their bank account is issued by banks in China or not. It can only be collected in cash or transferred to the employer's corporate account.
The method of collecting cash depends on the amount of the remaining funds. If the amount is less than CNY 10,000, applicants can collect cash immediately on site after the required documents are accepted. If the amount is more than CNY 10,000, once the required documents are accepted by the counter of the medical insurance center, applicants need to make an appointment for cash collection at a scheduled time.
If applicants choose to transfer the remaining funds to the employer's corporate bank account, they will need to fill in a registration form. After seven working days, the remaining funds will be remitted to the employer's corporate bank account, and the employer shall withdraw the money and transfer it to the applicant.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.