Refunding Social Insurance for Expatriates
Going through the complexities of working abroad can be a hard task for expatriates, especially when it comes to understanding the specificities of social insurance in their host country.
In China, expatriates are required to participate in social insurance. However, what remains lesser known is the possibility of refunds upon departure. Expatriates who have contributed to the local social insurance system may be entitled to reclaim certain portions of their contributions upon their leaving the country.
In this article, we delve into the types of social insurance eligible for refunds in China. The process of withdrawing social insurance funds can vary depending on the type of insurance and the specific circumstances of the individual. We take the circumstances generally in Shanghai as an example.
Types of Insurance
In Shanghai, as in many regions across China, the social insurance system comprises several components. The main types of social insurance in Shanghai typically include pension insurance, medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance. The employer is required to participate in full insurance for the recruited expatriate, while the expatriate individually is required to participate in three of them: pension insurance, medical insurance, and unemployment insurance.
Conditions for refund
Expatriates working in Shanghai may be eligible for a refund of their paid social insurance contributions under certain conditions. Typically, these conditions involve the expatriate leaving China permanently or ceasing their employment within the country. The specific requirements for eligibility and the types of insurance that can be refunded may vary depending on local regulations and agreements between China and the expatriate’s home country. However, common conditions for refund eligibility often include:
- Permanent Departure: Expatriates who permanently leave China and terminate their employment contracts are usually eligible to apply for a refund of their social insurance contributions. This departure could be due to various reasons, such as the completion of a work assignment, relocation to another country, or retirement.
- Non-Chinese Citizenship: Refund eligibility may be contingent upon the expatriate not holding Chinese citizenship. Foreign nationals who have contributed to China’s social insurance system during their employment are typically the primary recipients of refund benefits.
- Compliance with Regulations: Expatriates must ensure they have fulfilled all relevant administrative procedures and requirements during their stay in China.
- Application Process: Expatriates seeking a refund must follow the designated application process outlined by the relevant authorities in Shanghai. This process often involves submitting documentation, such as proof of employment termination, identification documents, and relevant forms, to the appropriate government departments or agencies.
- Time Limitations: There may be specific time limitations for expatriates to apply for a refund following their departure from China.
Refund or not
- Pension Insurance Refund → Yes
Expatriates who have contributed to the pension insurance during their employment may be entitled to a lump-sum refund on the personal account of the pension contribution upon departure.
- Medical Insurance Refund → Yes
Expatriates can also apply for a refund from their medical insurance account if they have not used up their medical account balance during their stay.
The social insurance refund process can be complex, as requirements may vary by region and individual circumstances. Expatriates are advised to work closely with their employer and the local social insurance authorities to ensure a smooth refund process when leaving Shanghai.
Expatriates must provide their passport, work permit, proof of social insurance contributions, and documentation of their departure from China, such as an airline ticket or residence permit cancellation.
The refund processes cost at least one month. Some may take up to 3 months.
- Unemployment insurance → No
Expatriates cannot apply for a refund of their unemployment, even if they will leave China.
Those who can register as unemployed and claim unemployment benefits in Shanghai are: Urban and rural workers of working age who can work, have the requirement for employment, and are in a state of joblessness, and whose place of domicile, permanent residence, place of employment or place of insurance coverage must be in the city.
Chinese citizens who are residents of the Hong Kong Special Administrative Region, the Macao Special Administrative Region, and residents of Taiwan (hereinafter referred to as Hong Kong, Macao, and Taiwan residents) shall refer to the Notice.
- Other Insurance Refunds → No
Refunds for other types of social insurance, such as work-related injury, and maternity insurance, are less straightforward.
- Work-related injury insurance refunds can be applied for by the employer on behalf of the employee, but the process varies depending on the severity of the injury.
- Maternity insurance is generally not eligible for refunds.
Social Insurance Conventions
It is worth saying that several countries have signed bilateral or multilateral agreements with China on social insurance. So far, China has signed such agreements with Germany, South Korea, Denmark, Canada, Finland, Switzerland, the Netherlands, Spain, Luxembourg, Japan and the Republic of Serbia. These agreements facilitate the coordination of social security benefits and contributions between countries, ensuring that expatriates receive the appropriate coverage and entitlements during their time abroad.
It should be noted that the signing of bilateral or multilateral agreements does not mean that expatriates are completely exempt from the obligation to participate the social insurance. When such agreements are in place, expatriates should take proactive steps to understand the terms and implications of these agreements, including any provisions related to social insurance refunds upon departure. Speak to the local social insurance department is the most convenient way to understand more.
If you need help or have other questions, please contact us.
References:
Notice on Further Improving the Work Related to Unemployment Registration and Unemployment Insurance in the City
https://rsj.sh.gov.cn/tjypx_17728/20201021/t0035_1394902.html
Symbol: Shanghai Renshegui [2020] No.21
Measures for Application for and Payment of Unemployment Insurance Money
http://www.mohrss.gov.cn/xxgk2020/gzk/gz/202112/t20211229_431802.html
