China's social insurance explained: the "five insurances and one fund"
Pension, medical, unemployment, work injury and maternity insurance, plus the housing fund: what each does, who pays and what it means for your payslip.
If you work in China, you will hear the phrase "five insurances and one fund" (五险一金). It describes the social insurance and housing savings that employers and employees pay into every month. Together they form the country's main safety net for retirement, illness, job loss and housing. This guide explains China's social insurance system, what each of the five insurances covers, how the housing fund fits in, and why your contribution base matters.
The five insurances
Pension insurance builds your basic state pension. Both you and your employer contribute, and the amount you receive in retirement depends on how many years you contributed and on the wage level you contributed at. You need a minimum number of contribution years to receive a monthly pension, currently 15 years, which is being raised gradually to 20 years from 2030 under China's retirement reforms.
Medical insurance pays part of the cost of treatment at designated hospitals and pharmacies and builds a personal medical account that you can use for some costs. Unemployment insurance provides benefits for a limited period if you lose your job involuntarily, provided you have contributed for long enough.
Work injury insurance covers medical costs and compensation for injuries or illness caused by work, and maternity insurance covers costs and allowances around childbirth. These two are paid by the employer only. In many places maternity insurance has been merged into medical insurance, but its benefits continue.
How much employees pay
Rates vary by city. In Shanghai, for example, employees pay 8% for pension, 2% for medical insurance and 0.5% for unemployment insurance, a total of 10.5% of their contribution base, while employers pay considerably more. With the housing fund on top, employee deductions in Shanghai can reach about 17.5% of salary. Our guide to China individual income tax shows worked examples.
The one fund
The "one fund" is the housing provident fund, a savings account that you and your employer pay into equally and that you can use to buy, build or rent a home, or to get a cheaper housing loan. Our housing provident fund guide explains it in detail.
Your contribution base matters
Contributions are a percentage of your contribution base, usually your average monthly salary in the previous year, but kept between a minimum and maximum that each city sets and updates every year. Employers sometimes declare a lower base to save money, which also lowers your future pension and benefits. Checking that your base matches your actual salary protects your entitlements. Your own contributions are deductible before income tax, so they also reduce your tax bill.
Moving cities
Social insurance is administered locally, but pension and medical rights can generally be transferred when you move between cities, so your years of contribution are not lost. Keep records of where you have worked and contributed, and use the national social insurance app or your local bureau to check your history.
Topping up your retirement savings
The basic pension replaces only part of your working income, so many workers add to it. The voluntary personal pension scheme lets you save up to CNY 12,000 a year with a tax deduction; see our guide to China's personal pension scheme.
See the effect on your pay
Our China salary tax calculator shows how social insurance and the housing fund reduce your taxable income and take-home pay, using Shanghai's rates or your own figures.
Frequently asked questions
What are the five insurances in China?
Pension, medical, unemployment, work injury and maternity insurance.
Are social insurance contributions tax-deductible in China?
Yes. Your own contributions are deducted before income tax.
Can I transfer my social insurance when I move city?
Generally yes, pension and medical rights can be transferred.
Sources
This article is general information, not financial advice.