The Beijing perspective

In China, there are five types of statutory social insurance that must be paid into the state social insurance fund together by both the employer and employee. These include basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance.

PRC law requires the employer to pay the contributions of work-related injury insurance and maternity insurance in full and split the contributions of the remaining three with the employee. The contribution is calculated on a base which is generally the average amount of the employee's salaries in the last year. In most regions in China, this calculation base for each employee will be adjusted every January.

As per the state law, the employer must pay a certain percentage of the base as its contribution while the employee shall pay their percentage as well, which is deducted from the employee's pre-tax income.

Overall, there are two factors, i.e. the social insurance base (Base) and the proportion of each party's responsibility (Proportion), that together determine the contribution amounts. However, the application of these two factors varies among different regions of China due to different local standards published by local governments.

Beijing as an example

In Beijing, the Base for an individual employee is the individual's average monthly salary (pre-tax) last year from January to December, and the Base has an upper limit and a lower limit. The upper limit applies to those whose average salaries of last year exceed three times the amount of Beijing's average salary for employees in the last year (i.e. Rmb17,379). Similarly, the lower limit of the Base is 40% of the Beijing average for pension insurance and unemployment insurance, and 60% of the Beijing average for the other three types of social insurance.

The Proportion of contribution for the employer and employee, respectively, is as follows: