No general retirement allowance
In Korea anyone who works a year or more receives a retirement allowance regardless of why they leave. China has no such general scheme. If you resign for your own reasons you normally receive nothing; economic compensation under the Labour Contract Law is paid when the employer ends the contract or you leave because of the employer’s fault.
Retirement income relies mainly on the basic pension from social insurance, topped up by an enterprise annuity set up by the employer or a private pension you open yourself.
Economic compensation: N, N+1 and 2N
Lump-sum compensation for termination is free of income tax up to 3 times the local average annual wage of the previous year; only the excess is taxed, separately from comprehensive income.
N = years of service (one month per year; 6 months or more counts as a year, under 6 months as half a month) Monthly wage = average of the last 12 months (including bonuses and allowances) Cap: if the wage exceeds 3 times the local average monthly wage of the previous year, use 3 times and at most 12 years Example: 5 years 8 months, average 15,000 yuan → 6 × 15,000 = 90,000 yuan
| Situation | Amount | Legal basis |
|---|---|---|
| Mutual termination proposed by the employer, redundancy, or non-renewal at expiry for the employer’s reasons | N | Labour Contract Law, Articles 46 and 47 |
| Employee terminates because of employer fault, such as unpaid wages or no social insurance | N | Article 38 |
| Employer terminates for illness, incompetence and similar, paying one month instead of 30 days’ notice | N + 1 | Article 40 |
| Unlawful dismissal | 2N (damages) | Article 87 |
| Resignation for personal reasons | Normally none | - |
N is a number of months based on years of service. “+1” is one month’s pay in lieu of notice.
Gradual increase in retirement age (from January 2025)
Under a September 2024 decision of the NPC Standing Committee, the statutory retirement age is being raised over 15 years starting 1 January 2025.
- Flexible early retirement: Once the minimum contribution period is met you may retire up to 3 years early by choice, but not before the original age.
- Flexible later retirement: After reaching the statutory age you may delay by up to 3 years if your employer agrees.
- Your choice: Employers may not force or pressure you in choosing a retirement age.
| Group | Original age | New age | Pace |
|---|---|---|---|
| Men | 60 | 63 | 1 month later for every 4 months of birth |
| Women (managerial and professional, etc.) | 55 | 58 | 1 month later for every 4 months of birth |
| Women (production workers, etc.) | 50 | 55 | 1 month later for every 2 months of birth |
For example, men born in or after September 1976 retire at 63, and women born in or after September 1981 who originally retired at 55 retire at 58.
Qualifying for a pension: minimum contributions from 15 to 20 years
To receive a monthly basic pension you must meet the minimum contribution period. It stays at 15 years for people retiring in 2025–2029, then rises by 6 months each year from 1 January 2030, reaching 20 years in 2039.
If you reach retirement age without enough years, you can, under the rules, keep contributing or pay a lump sum to reach the minimum and then draw a monthly pension. The Social Insurance Law also allows a transfer to urban and rural residents’ pension insurance. Check the details with your local social insurance office.
How the basic pension is calculated
Example: local average wage 10,000 yuan a month, lifetime average contribution index 1.0 (contributing at the average wage), 35 years, retiring at 60 with a 250,000-yuan personal account: basic part 3,500 yuan + personal account part about 1,799 yuan = about 5,300 yuan a month. The figures are illustrative only.
Contributing on a higher base for longer raises the basic part, and retiring later reduces the payout months, which raises the personal account part. Pensions are adjusted each year by national decision.
Basic pension = basic part + personal account part (+ transitional pension for work before 1997) Basic part = (local average monthly wage of employees last year + your indexed average monthly contribution wage) ÷ 2 × years of contribution × 1% Personal account part = personal account balance ÷ payout months Payout months: age 50: 195, 55: 170, 60: 139, 63: 117
Enterprise annuities, occupational annuities and private pensions
The private pension scheme has applied nationwide since 15 December 2024. Anyone in basic pension insurance can open a dedicated bank account and choose deposits, funds, insurance or government bonds. Some products do not guarantee the principal, so read the product documents.
Money can normally be withdrawn on reaching pension age, total loss of working capacity or emigration. From 1 September 2025 it can also be withdrawn when, in the 12 months before applying, out-of-pocket medical costs under basic medical insurance for you, your spouse or minor children exceed the province’s per-capita disposable income of the previous year; after receiving a total of 12 months of unemployment benefit in the two years before applying; or while receiving minimum living allowance.
| Tier | Scheme | Contributions | Tax |
|---|---|---|---|
| 1 | Basic pension insurance | Employer 16% + employee 8% | Employee share deductible |
| 2 | Enterprise annuity | Employer up to 8% of payroll; employer and employee together up to 12% | Employee share deferred up to 4% of the base; taxed separately on payout |
| 2 | Occupational annuity (public sector) | Employer 8% + employee 4% | Same as enterprise annuity |
| 3 | Private pension | You, up to 12,000 yuan a year | Deductible when paid, returns untaxed, 3% on payout |
FAQ
Can foreigners receive a Chinese pension?
Yes, if they have joined basic pension insurance, met the minimum contribution period and reached pension age. If they leave China earlier, they can keep the personal account or apply in writing to receive its balance as a lump sum.
Does a later retirement age mean I must keep working until then?
The retirement age is the statutory age for starting the basic pension. Your employment contract follows its term and the Labour Contract Law, and it ends when you reach retirement age and start drawing the basic pension.
Who benefits most from the private pension tax break?
Contributions are deducted at your marginal rate and payouts are taxed at 3%, so the gain is larger if your marginal rate is 10% or more. At a 3% rate the saving and the 3% payout tax roughly cancel out, and with no taxable income there is no deduction benefit but payouts are still taxed at 3%.
Can I get both economic compensation and unemployment benefit?
Yes. If you lost your job involuntarily and paid unemployment insurance for at least a year, you can claim unemployment benefit after registering, separately from compensation.