[Updated 4/16/24] In the past, employees in China cared most about their accident benefits and medical insurance. However, as a wider range of benefits becomes more commonplace, medical and life insurance are increasing in priority for employees. Employers are generally surprised by the low demand for benefits, with much greater emphasis placed on salary and bonuses. However, this is changing for most ‘white collar’ positions, where demand for medical benefits is increasingly common.

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Tienmann Chau


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Salaries in Shanghai and Beijing are now comparable to those in many Western cities, so companies can no longer increase salaries to compete in the talent market.

Mandatory Employee Benefits in China

Mandatory employee benefits in China are state-administered and include medical care, unemployment, workers’ compensation, and maternity benefits. Supplemental employee benefits in China include three types of retirement benefits: life insurance and ADD, as well as healthcare. The average benefit costs vary by province.

Mandatory benefits in China are based around the State Social Insurance System, which the municipal government administers. They are not purchased from the private market but administered as a social welfare system. Employers and employees contribute to the system in proportion to the employee’s salary (percentages vary by municipality, and the maximum contributions are capped). 

Retirement Benefits – Part of the Social Insurance Scheme

  • The normal retirement age is 60 for males and 55 for female workers. Benefits: Designed to meet the basic needs of retirement life. Basic retirement benefits are made up of three portions:
    • Base pension, equal to (the average of Social Average Annual Salary of the year before retirement time and the insured’s indexed salary) × years of contributions (including those regarded as contribution period) × 1%
    • Individual account pension, equal to their individual retirement account balances/number of months stipulated by the government
    • Transitional pension is based on the age of insured employees and the accumulation period of their individual retirement account (different regions have different standards)

Medical Care Benefits– Part of Social Insurance Scheme

  • Individual Medical Account: Used for normal clinical expenses, copayment of critical illness, and hospitalization expenses
  • Pooled Public Medical Funds: Used for reimbursement of critical illness and hospitalization expenses
  • Threshold of Pooled Public Medical Funds Reimbursement: 10% of local social average annual salary
  • Maximum Benefits from Pooled Public Medical Funds: Four times local social average annual salary

Unemployment Fund – Part of Social Insurance Scheme

  • Unemployed monthly salary subject to local governmental regulation standards
  • Medical care according to social medical insurance policies
  • Lump-sum death benefits for the employee’s dependents
  • Occupational training allowance, job introduction allowance, etc.

Time Limit: Two months’ benefit for each year of membership, up to a maximum of 24 months’ benefit

Housing Fund – Part of Social Insurance Scheme

  • Both Employee and Employer contribute equal amounts to a Housing Fund,
    • Mandatory (minimum) contribution at 5% of gross salary (employer and employee each contribute 5%)
    • Supplemental portion, which is an optional contribution beyond 5%. The percentage is capped, but the cap will vary by locality.
  • As with all social insurance contributions, these amounts are deducted from pre-tax gross salary, so there are some tax benefits to increasing the supplemental contribution (compared to paying out the same amount as additional salary).
  • The employee can use the housing fund for defined expenses:
    • Purchasing residential property
    • Construction, reconstruction, and renovation of residential property
    • Lease payments on residential property
    • Purchasing residential property on behalf of parents
    • Funds can also be claimed upon specified situations such as:
      • Retirement
      • Emigration
      • Total Permanent Disability
      • Unemployment/Destitution

Work-Injury and Disability Benefits (a.k.a Workers’ Compensation)

The obligation to provide benefits is split between those paid by the Social Insurance Scheme.

  • Social Insurance Obligations
    • Medical benefits during the treatment period:
      • Reimbursement of medical expenses
      • Medical rehabilitation expense reimbursement
      • Allowance for room and board
      • Allowance for medical care expenses
    • Death benefits
      • Lump-sum funeral allowance
      • Monthly dependent living allowance
      • Lump-sum death benefit
    • Disability benefits after disability appraisal:
      • Lump-sum disability benefits; disability appraisal grades 1-4 (most serious, likely not able to work in a normal capacity in the future)
      • Monthly salary allowance before retirement age or retirement
      • monthly salary allowance after retirement age
      • Monthly living allowance, if needed
      • Other allowances include occupational training allowance, job introduction allowance, etc.
  • Employer Obligations
    • Sick leave monthly salary during the medical treatment period:
      • Paid by the employer; same monthly salary as earned during
    • The employer must continue to employ the employee until the employee reaches the normal retirement age (or until the employee chooses to terminate employment voluntarily).
    • Disability benefits after disability appraisal:
      • Lump-sum disability for disability appraisal grades 5-10 (less serious, can return to work eventually)
      • To be paid when the employee voluntarily ends the employment relationship (waived if the employee works until normal retirement).
    • An employer’s liability insurance policy can cover the above.


Maternity Benefits

  • Maternity Leave: Normally 98 days, additional 15-30 days in case of a complicated delivery.
  • Maternity Leave Monthly Salary: Actual monthly salary, jointly paid by maternity pooled funds and employer.
  • Medical Care Expenses/Allowance: Used for medical expenses associated with the delivery and/or related birth control treatment and/or related female illness treatment in the form of medical allowance (such as RMB 3,000 in Shanghai) or medical expense reimbursement (such as in Guangdong).
  • Following the “Opinions of the General Office of the State Council on Comprehensively Advancing Combined Implementation of Maternity Insurance and Basic Medical Insurance for Employees” (No. 10 [2019] of the General Office of the State Council), Maternity Benefits are combined with the Basic Medical Care Insurance, with unified registration, fund payment, and management.


Supplemental Employee Benefits in China

Accidental Death & Disability Insurance (AD&D)

AD&D is historically the most pervasive employee benefit provided by employers.

  • The benchmark sum insured for AD&D is usually between 24 to 3 times the annual salary (24 to 36 months).
  • A certain percentage of the insured amount under the group AD&D policy will be payable if the employee suffers one of the following losses due to an accident. It can be structured two ways:
    • Type I: Insurer-defined levels of disability and/or dismemberment
    • Type II: Government-defined Levels of Disability (1 -10)
      • Same classification is used for Work Injury Benefits (Worker’s Compensation)

Life Insurance, aka. Death/Total Permanent Disability due to Illness

Life insurance is an increasingly popular employee benefit. It is intended to fill the gap left by accident insurance, which does not cover death or disability caused by illness.

  • The benchmark sum insured for group life Insurance can vary anywhere from one to three times the annual salary (12 to 36 months).

Supplemental Medical Benefits

China’s Social Security System includes medical benefits. However, supplemental medical insurance is considered by many to be necessary to supplement the limitations of Social Security.

Critical Illness

Critical illness coverage is intended to provide a lump-sum benefit if a patient is diagnosed with a specified critical illness. The intention is to provide additional funds that can be used towards additional treatments and therapies.

  • Practices vary, but the maximum payout is typically scaled somewhere between 6 -12 months’ average salary.


This information about employee benefits in China is provided by Ximco, Asinta’s employee benefits consulting Partner in China.

Nothing on this country page is intended to be legal, financial, or tax advice, and readers are advised to consult with their appropriate advisors regarding any legal, financial, or tax implications this information may address.

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