Pacific Bridge, Inc. - Asian HR eNewsletter

Volume 9, Number 12 (December 3, 2009)

EXPATS TO JOIN SHANGHAI'S SOCIAL SECURITY SYSTEM

On November 10, 2009 the Shanghai Municipal Human Resources and Social Security Bureau announced that, for the first time, expatriates employed in the city will be allowed to join the municipal social security program. Shanghai’s social security program includes health and disability benefits as well as a pension fund.

According to the announcement, the program will be voluntary and is open to all foreigners, including overseas Chinese, Taiwanese and residents of Hong Kong and Macau who are working in Shanghai. Foreigners who have been making contributions to the system for a specified period of time (the exact length has not yet been released) will be eligible to receive pension funds when they reach retirement age. The retirement age in China is set at 55 for women and 60 for men.

Employer contributions to the Shanghai social security fund for foreigners will initially be set at 37% of salary, while employee contributions will be an additional 11%. The annual maximum total contribution is RMB 9,876 (about US$1,445) – given the relatively high salary levels of expatriates, this will be the amount that companies should expect to pay per expatriate. Additional costs to companies will include time spent on paperwork for monthly filings to the government.

Last month’s announcement also notes that those foreigners who leave Shanghai before retirement age will be able to cash out a portion of the money that they have contributed. Further details have not yet been released, but will be published on the Shanghai Municipal Human Resources and Social Security Bureau website at www.12333sh.gov.cn (Chinese only). Shanghai is the first city in China to allow non-Chinese citizens to participate in a social security plan, but experts believe that other cities, including Shenzhen and Guangzhou, will also implement plans within the next few years.



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