Foreign employees working in China are generally required to participate in the country’s social insurance system, covering pensions, medical insurance, unemployment, work-related injury, and maternity benefits. While contributions are mandatory in most cities, expatriates often face uncertainty about how to recover these funds when departing China permanently. Understanding the regulatory framework and the practical steps involved is essential to avoid financial loss and ensure compliance.

Eligibility and Scope

Expatriates who have contributed to China’s social insurance system are entitled to withdraw their pension contributions upon leaving the country. The withdrawal applies only to the employee’s portion of the pension fund; employer contributions remain within the system. Other types of insurance, such as medical or unemployment, do not provide lump-sum refunds. This distinction underscores the importance of managing expectations and planning accordingly.

Withdrawal Procedures

The process begins with the expatriate formally terminating their employment contract and deregistering from the social insurance system. Applications must be submitted to the local Social Insurance Bureau, supported by documentation including:

• ID card of the handler
• Company seal
• Business license
• Copy of original passport of foreign nationals
• Departure certificate
• Proof of resignation

Once approved, the funds are transferred to the expatriate’s designated overseas bank account. The procedure is relatively straightforward but requires careful attention to documentation and timing, as incomplete submissions can delay processing.

Treatment of Contributions

Employee contributions to the pension fund are refundable, while employer contributions remain in the system. If the expatriate later returns to China for employment, previously accumulated contributions can be reinstated, ensuring continuity of benefits. This mechanism reflects the system’s dual purpose: providing immediate relief for those leaving permanently, while preserving long-term entitlements for those who may return.

What can an Expatriate Expect to Receive?

The personal Pension and the Unemployment Insurance are the only parts that can be taken when closing the social insurance account, the rest and the part that the employer provides will effectively be lost. In the case study below, the expatriate earned 20,000 RMB per month for four years in a company based in Beijing and paid the social insurance, 8% for the Pension and 0.2% for the Unemployment Insurance. Also, the social insurance base is cap at 3 times of average salary per year. In this case, the monthly salary of CNY 20,000 does not exceed the base ceiling for the four years working in Beijing.

This case study is only a small example of what an expatriate can expect when working in Beijing; other cities and regions have different percentages, which can be more beneficial. Furthermore, social insurance is not affected by the expatriate using the beneficial tax deductibles specific to the expatriate’s remuneration packages, which include housing, meals, dry-cleaning, education, and elderly care. These tax benefits have been extended till the end of 2027.

A departure from China allows foreign individuals to file for a refund of part of the social contribution, on the other hand, the consistent contribution for 15 years to social security would enable a foreigner to elect for retirement, fusing both employee and employer benefits. As of today, this has not yet happened as the social insurance system for foreigners was set up less than 15 years. Conditions regarding the specific criteria for retirement qualification should be published in the coming years. 

Repatriation Limitations

For those expatriates who have reached the end of their professional journey in China, it would be a shame to leave with part of their hard work not collected. However, expatriates should remember that payment without tax receipts to demonstrate tax filing fees is a maximum of USD 50,000 per annum. If one wants to transfer more than USD 50,000, they can do so with certified tax receipts to demonstrate tax filing and payments to their bank accounts.

For any repatriation transfer above USD 20,000, it is recommended for the expatriate to go to their bank in China and talk to them regarding how much money is possible for them to transfer in one go.

Going to the bank for USD 20,000 is because some banks have limits on how much CNY is exchanged, affecting how much the expatriates can exchange in their account at a time. By going to the banks, it is possible to create a repatriation plan which may exceed USD 20,000 per transfer; in any case, expatriates should not panic as there are plenty of solutions.

Once approved, the transfer will just incur the transfer and exchange fees as long as the transfer is done from and to personal and not corporate accounts. It is important to obtain tax certificates for income declared and tax paid, even for non-taxable income, as long as it is declared and a tax certificate issued, this is supporting documentation for repatriation of funds overseas.

LehmanBrown’s Recommendation

Whether an expatriate is leaving or just arrived or is still working in China, the best recommendation is to sit with an accountant to establish an effective Tax Plan to maximise their fringe benefits. Even if an expatriate is in the final three months of their operations, they can still quickly gain benefits before the end of the year.

Regarding an expatriate claiming their social insurance at the end of their professional journey in China, it is recommended to begin coordinating with the company and figuring out what challenges they might have to complete the claim. Often companies will struggle as it is not a standard procedure, and every city and region may have their specific requirements.

Hence, the best recommendation for an expatriate or company operating in China is to contact an accounting firm like LehmanBrown who can help navigate the difficulties and mitigate any issues that may arise.

Reach Out and Find Out More

If you are an expatriate who would like to claim your social insurance or a company looking to understand how the process works for your expatriate staff, feel free to contact LehmanBrown via email: enquiries@lehmanbrown.com.

LehmanBrown has been assisting and advising companies from around the world operating in China for two decades and is always happy to advise anyone on their China journey.