Normal pension age is 60 years for men, 50 years for blue collar women and 55 years for white collar women.

Basic / Defined benefit.

The pension pays 1% of the average of the indexed individual wage and the province‑wide average earnings for each year of coverage, subject to a minimum of 15 years of contributions. The pension in payment is indexed to a mix of wages and prices, which has been about 5% in recent years. The modelling assumes 50% indexation to wages.

Defined contribution (funded or notional accounts)

Employees pay 8% of wages to the individual account system. The accumulated balance in the fund or the notional account is converted into a stream of pension payments at the time of retirement by dividing the balance by a government-determined annuity factor, depending on individual retirement age and average national life expectancy. In all provinces, these annuity factors, for both males and females, (for monthly benefits) are:

The modelling results are based on a funded defined contribution system.

Voluntary funded defined contribution

From November 2022 a voluntary private pension plan was launched in 36 Chinese cities to boost voluntary retirement savings. All individuals covered by the state pension programmes for urban or rural workers can choose to participate. Participants can contribute up to CNY 12 000 per year with tax breaks up to this level. This component is not included in the modelling results.

Early retirement

It is possible to claim a pension benefit from the age of 55 years for men and 45 years for women if the individual engaged in physical work in certain industries or posts.

Late retirement

It is possible to defer pension payments until after normal pension age, but the pension benefit is not valorised.

Childcare

There are no credits for periods out of the labour market.

Unemployment

There are no credits for periods out of the labour market.

Self-employed

Self-employed workers are voluntarily covered by the same system as for employees, but their contribution rate is lower at 20%, with 12% going to the pool and 8% to individual accounts.

Taxation of workers

There is a standard income‑tax allowance of CNY 60 000. Employees are allowed to deduct social insurance and housing fund contributions to calculate taxable income.

Taxation of worker’s income

Individual Income Tax Rates (applicable to income from wages and salaries).

Social security contributions payable by workers

Under the revised system, employers contribute a maximum of 16% of earnings to cover the basic pension. The second-tier pension is financed by an 8% contribution from employees. These contributions are capped at three times the local average wage. The social security contributions to individual accounts are exempt from income taxes.

Taxation of pensioners

There is no additional tax relief for pensioners.

Social security contributions payable by pensioners

Pensioners do not pay any social security contributions.