The Shanghai government has allowed a long-standing policy to expire, with the apparent result that foreign nationals and residents of Hong Kong, Macau and Taiwan (HKMT) who work in Shanghai now must be enrolled in the social security system. Before the policy expired, enrollment had been optional (or at least not enforced). The social security system provides retirement, healthcare, maternity, unemployment and workers compensation benefits, with required monthly contributions to these programs in Shanghai totaling 10.5% of covered pay for employees and about 27% of covered pay for employers (covered pay, in 2021, is pay between 5,975 yuan and 31,014 yuan). Some partial exemptions from enrollment may apply for foreign and HKMT workers covered under their home social security systems.
Affected employers should ensure compliance and evaluate the financial implications for their companies and employees. Employment costs for expatriate employees in Shanghai who were not participating will increase considerably as a result of this change. As employees are also required to contribute to social security, their net pay will also be lower.