China Licensed Group Pension Plan

There are many insurers in the China market offering pension plans. Almost all large brand name Chinese insurers have an annuity division that handles such products.

Most insurers also provide an online portal for both:

  1. the administrators of the group plan (i.e. HR, CFO), giving access to the details needed to administer the plan to employee’s.  
  2. the end user (i.e. the employee) to check performance and manage pension (where options are given).

There are a number of key areas that administrators and end users would like more information, so we have put into a simple Question and Answer (Q&A) format as follows. The answers are and feedback are from one pension provider only:


  1. Should Individual Income Tax (IIT) be paid prior to sending the funds to the pension insurer?

— Yes. According to local regulation, the premium or funds should be taxed of IIT and then paid to insurance company.

  1. Are there any savings on the IIT?

— The pension is subject to IIT so in theory no. However potentially there is a saving if your group currently does the accounting when paying to the employee at the end of their term, and paying the IIT as a lump sum. If rather the accounting is done on a monthly basis and the IIT paid on a monthly basis, the IIT sum should be lower.

  1. Are there any further business or individual taxes to be paid when funds are sent to the pension fund?

— No  

4. Are there any further business or individual taxes to be paid when the employee collects their pension at retirement or resignation?

— If the premium (funds) has been taxed of IIT, no further taxes are to be paid, not only the funds itself but also the interests or gains.

  1. When a client sends pension funds to the insurer, will a fapiao (official Chinese tax invoice) be provided?

— Yes, please refer to the attachment for the sample.

*All details should be checked and confirmed with your group’s finance and tax division.


If a group is to purchase the plan, and pay a certain amount such as 5% of salary, can the employee also choose to contribute further amounts? Such as an extra 2% or 3%?
— Yes, the employee can choose to contribute as well.

i. Is it possible for each employee to choose the amount, and therefore each employee has different amounts? Or must the contribution % be the same for everyone?
— Yes, the employee can choose the amount, we can set several choices for them, for example: option A) 2%, option B) 3%, option C) 4%.

ii. If the employee can choose, must it be the same contribution every month, or can they change every month?
— Usually we don’t suggest changing the contribution ratio by monthly, as it will will cause a lot of admin work for HR. However the employee can be given the option to change the contribution ratio annually, by completing the necessary forms and submitting to HR before a specified date .

3. If a group is to purchase the plan, and pay a certain amount such as 5% of salary, can the group offer to match any contribution an employee also chooses to contribute? For example, if the employee wants to contribute 3%, the group would contribute 5% plus 3% = 8%?
— Yes, this will encourage the employee to contribute.

4.i Can pensions be paid out in other countries at resignation / retirement?
— Yes, pension can be paid out to employee’s overseas account at resignation / retirement.

ii. Can this be paid in any currency to any country?
— This can be paid in commonly used currencies, such as US dollar, Euro dollar, Japanese yen, HK dollar, Swiss franc, Australian Dollar, Singapore Dollar and Canadian dollar + more.

iii. And what fees would they see, such as conversion fees?
— Some banks will charge transaction fee for receiving remittance, this fee is caused by the receiving bank, and will be borne by the employee themselves.
— Some insurers will bear the transaction fee caused by the paying bank and the clearing bank when processing the payment.

5. How may the funds be repatriated?
— The HR should provide the employee with the IIT statements each year, and at the end of their contract. This will allow for their pension to be paid to them.

When a company sets up a pension plan, they can choose the vesting structure, such as one geared towards employee retention. Below are two examples of how the group may look to vest:

Example 1: 100% of contribution vested to employee, after 2 years of service

Example 2: Gradual increase of contribution vested to employee, for each year of service

A company can choose the fund the pension is paid into (such as guaranteed return), or allow the members to choose the fund (which may have more risk / higher returns).

If an employee discontinues employment, must they then withdraw / collect their pension?
— If an employee discontinues employment, they can choose to withdraw or reserve the account. The reserve account can be withdrawn in future upon application of the employee.

2. If only 40% is vested to the employee, what happens to the remaining 60% when the employee collects their 40%?

— The remaining 60% will go to the school’s public pool account, which can be used to offset the future contribution or can be withdrawn by the school.

Currently we are only aware of two pension providers who have web portals geared towards businesses with expatriate employee’s, with English language portals.

The employee can set their own personal login password, and review the pension fund performance when they wish.