Expats in China pay in for benefits but don?t understand how to claim

Expats living and working in China are confused as to whether the country’s benefits system is any use to them.

Expatriates working legally in China are forced to contribute to the country’s social security system, as it’s automatically deducted from their salaries along with tax due.

Both deductions add up to around 25 per cent of average salaries, but the vast majority of foreigners are unsure as to whether the system is any use to them. One expat working as a counsellor at Beijing’s Harrow International School has been paying social security for as long as she’s been working as it’s a mandatory deduction. She’s never made use of the system as she’s no idea exactly what it covers or how to use it.Most foreigners working in China have had the same experience. As a result, it’s generally regarded as taking money but giving nothing back.

Another American expat has worked in Beijing for two years and has the same experience as regards social security and other deductions from her salary. She believes medical insurance is part of the monthly deductions, but is ignorant about what else she’s entitled to. Chinese law obliges expats to pay social security, but different provisions are offered in different regions. Basically, contributions go towards pensions, unemployment insurance, maternity insurance and work-related injury cover as well as medical insurance. One problem is that, in general, unemployment benefits for foreign workers don’t exist, as no foreigner is allowed to stay in the country without having a job.

However, in Shanghai and other similar regions, this ‘national standard ‘law doesn’t apply and, as a result, foreigners don’t pay social insurance. For expats who’re paying there’s a get-out clause only applicable when an expat is leaving China, in that a written application will result in the deposited amount being returned as a lump sum. Another deduction is the Housing Fund, a means of saving towards renting or buying a property, with both employer and employee contributing. The amount can only be used for property-related expenses such as mortgage payments, property purchase or renovations. Foreigners with permanent residency can use the fund as do their Chinese counterparts.

It’s no surprise expats find the deductions confusing at best and impossible to understand at worst, with the vast majority deciding it’s just another non-refundable tax on their wages. Even attending hospital has its problems, with foreigners often being sent on to the hospital’s private medical facility or a local international hospital. Some purchase international medical insurance just in case, with others having help from their employers as regards language difficulties and reimbursement of the fees.