Suzhou Details Foreigners’ Mandatory Social Insurance Participation

March 6, 2012 Posted by China Briefing Reading Time: 4 minutes

Mar. 6 – Following the promulgation of a national decree ordering foreign employees’ mandatory participation in China’s social insurance system in September, 2011, Suzhou issued new documentation earlier this year to ensure the enforcement of this new policy citywide.

On January 18, 2012, the Ministry of Human Resources and Social Security of Suzhou announced the “Circular on Improving Foreign Employees’ Participation in Social Insurance Program in Suzhou (surenbaogui [2012] No.1),” detailing specific measures regarding foreigners’ participation in the city’s social insurance system.

Participation details
Enterprises, public institutions, social organizations, private non-corporation entities, foundations, law firms, accounting firms and any other organizations registered in Suzhou lawfully employing foreigners are all required to participate in the social insurance system in accordance with the law. Contributions should be made to the following five insurances:

Pension
Medical insurance
Work-related injury insurance
Unemployment insurance
Maternity insurance

Foreigners that qualify for participation and started working in Suzhou before October 15, 2011 are required to participate in the social insurance system from October 2011. Those who have already participated in pension, medical insurance and work-related injury insurance according to the “Circular on Issues Regarding Participation in Social Insurance Program by Foreigners and Residents from Taiwan, Hong Kong and Macau (sulaoshexian [2005] No.13),” effective from 2005, are required to also participate in unemployment and maternity insurance starting from October 2011 and make backdated premium payments for the two insurance items according to the their wage bases.

Foreign employees who have processed their social insurance registration before the end of February 2012 can make a backdated premium payment according to their wages actually declared. Foreign employees who are not part of the social insurance system before March 1, 2012 are subject to a backdated premium payment for all the social insurance items according to related provisions.

Implementation details
Foreign employees’ participation within China’s social insurance system – including transfers, renewals, and retirement conditions – is implemented the same way as Chinese employees under national and local regulations.

Payment and duration details
The required period and duration of premium payments for foreign participants to the social insurance system are set according to national standards. Former Chinese citizens who now hold foreign nationalities and who have records in the social insurance system in Suzhou can accumulate payments previously made as a Chinese citizen if they start a new job in the city.

Taiwan, Hong Kong and Macau residents
Lawfully employed Taiwan, Hong Kong and Macau residents (holding the “Employment Permit for Taiwan, Hong Kong and Macau Residents”) in Suzhou who are below retiring age are required to follow this Circular, before the new policy issued by the national and provincial government.

Date of effect
This notice comes into force from January 28, 2012, as Circular No. 13 ceased to be in effect.

In addition to Circular No.1 detailing specific measures regarding foreigners’ participation in the Suzhou’s social insurance system, the Suzhou Industrial Park has also updated the “Provisional Measures on the Management of Social Security Fund (Provident Fund).”

According to the “Circular on Improving Foreign Employees’ Participation in Social Insurance Program at Suzhou Industrial Park (suyuanlaobao [2012] No.5)” issued on February 28, 2012, foreigners that qualify for participation shall participate in social security Program B, which is designed in line with the national social insurance program and comprises of basic pension, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. Under Program B, housing fund contributions shall still be made but are considered separate from the five social insurance items. Those who have already participated in Program A (which is a comprehensive welfare package including all five social insurance items and the housing fund) before this notice can voluntarily choose to participate in Program B.

Listed below is a comparison between Program A and Program B:

Dezan Shira & Associates is a specialist foreign direct investment practice and can advise international companies investing in China on the country’s complete legal, tax and operational issues. The firm was established in 1992 and maintains 12 offices throughout China, in addition to practicing in Hong Kong, India, Vietnam and Singapore. For advice on all matters of China HR, payroll and costs, please contact the firm at china@dezshira.com or visit our web site at www.dezshira.com.

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