Hong Kong, Macau and Taiwan Residents to join Mainland Social Insurance

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On 29 November 2019, the Chinese government released the Interim Measures for Hong Kong, Macau and Taiwan Residents to Participate in the Social Insurance Scheme in the Mainland (Measures). The Measures, which will come into effect on 1 January 2020, require employers in Mainland China (Mainland) to register employees who are Hong Kong, Macau, and Taiwan residents (HMT Residents) for social insurance and to make contributions.

Eligible Individuals

The Measures were jointly released by the Ministry of Human Resources and Social Security and the National Healthcare Security Administration. They follow prior reforms that cancelled the requirement for HMT Residents to obtain work permits to work in China (see link to our article on this topic), and clarified some of the issues that were not addressed in the prior reforms. Under the Measures, there are 4 types of HMT Residents who are eligible:

Type A: HMT Residents legally employed by enterprises, public institutions, social organisations, individual businesses hiring any employee, and other organizations legally registered in the Mainland.

Type B: HMT Residents legally engaged in individual businesses in the Mainland, or HMT Residents in flexible employment who have obtained Residence Permits.

Type C: HMT Residents living in the Mainland who have obtained Residence Permits but have yet to be employed.

Type D: HMT university students studying in the Mainland.

Applicable Insurance

Type A residents will participate in all five categories of social insurance. That is, basic pension insurance for employees, basic medical insurance for employees, work-related injury insurance, unemployment insurance, and maternity insurance. Type B residents may only participate in basic pension and medical insurance for employees. Unemployed HMT Residents are eligible for fewer options. Type C individuals may participate in basic pension insurance and basic medical insurance for urban and rural residents. Type D individuals may participate in basic medical insurance for urban and rural residents.

Procedures

The procedures required for HMT Residents to apply and register for social insurance, and for issuance of social security cards, are consistent with those required for Mainland residents. There are rules for transfer of social insurance across different provinces.

HMT Residents leaving the Mainland

If HMT Residents leave the Mainland before meeting the conditions for receiving a pension, their individual social insurance accounts can be retained. Thereafter, if they return to the Mainland for employment or residence and continue to make contributions, the term of their contributions will be calculated on an accumulative basis. If they file a written application to terminate their social insurance, the deposits (only the individual contribution portion but not the employer portion) can be returned as a lump sum.

Dual Participation

HMT Residents who have participated in social insurance schemes in Hong Kong, Macau and Taiwan and who have retained aforesaid social insurance may choose not to participate in Mainland pension and unemployment insurance by presenting certification materials issued by an authorised agency. This eases some of the burden on employers and employees as it avoids double payment of premiums.

What This Means for Employers

Foreign nationals working in China have participated in the Mainland social security system since 15 October 2011. Nevertheless, due to the lack of legislation targeting HMT Residents, some cities in the Mainland held the view that HMT Residents can participate in the Mainland social insurance1, while other cities in the Mainland took the stance that employers should be obligated to make social insurance contributions for employees who are HMT Residents.2 The Measures clarify that employers are required to register HMT Residents for social insurance, but it remains to be seen whether all cities will implement this, especially Shanghai where the local authorities are not enforcing the requirement (effective since 2011) for foreigners to participate in social insurance.

Employers need to ensure that, starting from 1 January 2020, all of their HMT employees are registered for social insurance and make adequate and timely contributions, at least in those locations in the Mainland where the Measures are implemented.


1 Circular of Tianjin Labor and Social Security Bureau on Printing and Distributing Regulations on Social Insurance Paid by Foreigners or Persons from Hong Kong, Macau and Taiwan; Circular of the Suzhou Labor and Social Security Bureau on Issues Concerning Foreigners, Overseas Chinese and Taiwan, Hong Kong and Macau Residents' Participation in Social Insurance.
2 Circular of Beijing Labor and Social Security Bureau on Printing and Distributing the Beijing’s Implementation Measures for the Administrative Provisions on the Employment of Taiwan, Hong Kong and Macau Residents in the Chinese Mainland.