[Updated 3/27/23] In the past, employees in China traditionally care most about their accident benefits and medical insurance. However, as a wider range of benefits becomes more commonplace, medical benefits 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 salaries and bonuses. However, this is changing for most ‘white collar’ positions, where demand for medical benefits is increasingly common.

Asinta Partner
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 just increase salaries to compete in the market for talent.

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


Mandatory Employee Benefits in China

Mandatory benefits in China are based on the State Social Insurance System, which is administered by the municipal government. 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 – State Administered

  • 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 prior to retirement time and the insured’s indexed salary) × years of contributions (including those regarded as contribution period) × 1%;
    • Individual account pension, equal to his/her 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 his/her individual retirement account (different regions have different standards).

Medical Care Benefits– State Administered

  • 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 the local social average annual salary.

Unemployment Benefits– State Administered

  • 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

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, such as 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 is obligated to continue to employ the employee until normal retirement age (or until the employee chooses voluntarily terminate employment).
    • 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).
    • The above can be covered by an Employer’s Liability Insurance policy.

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 somewhere between 24 to three 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 in 2 ways:
    • Type I: Insurer-defined levels of disability and/or dismemberment
    • Type II: Government-defined Levels of Disability (1 -10)
      • The 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. 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 in order to supplement the limitations of Social Security.

Critical Illness

The critical illness coverage is intended to provide a lump-sum benefit if 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.

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