December 22, 2011 / 1:00 PM / 8 years ago

China to allow some foreigners to retire there

BEIJING (Reuters) - China will allow some foreigners who sign up to a new social security system to retire there so they can claim their pensions, state media said Thursday, offering details of a new tax that foreign businesses fear will push up costs.

The government has so far given only basic details about the scheme, which all foreigners who work in China are supposed to have started paying into from October, and officials have acknowledged jumping the gun before working out implementation.

Foreign executives in China have expressed concern that the tax will increase already rising costs in the world’s second-largest economy, and that the plan is too vague and will be hard for companies to implement.

One of those concerns has been that foreigners will not be able to access money from unemployment benefits or pensions because work visas are tied to jobs and become invalid when a person is no longer employed.

State news agency Xinhua, citing an unidentified Beijing social security official, said the government had made a decision on pensions at least.

“Those foreigners who contribute to social insurance and fulfill conditions will get social security, and will be able to, for example, retire in China and draw a pension,” the report said, without providing details of how that might happen.

Previously, the only foreigners allowed to retire in China were those who have dedicated themselves to the Communist Party or have worked selflessly for decades as teachers, doctors or in other similar fields there.

Money will also be paid back upon “written application of the end of the social insurance relationship,” it said. Otherwise, the money will be kept “until (the person) returns to work again in China.”

Xinhua did not address unemployment or whether China would issue visas to enable foreigners to claim the dole.

Of the 30,000 foreigners working in the capital, Beijing, only 2,000 had so far registered to pay the new tax, it said.

Foreigners are also expected to back-pay contributions from October, although many local tax bureaus have said they are still unsure how to collect the money.

State media has repeatedly brushed off complaints about the system, saying it is in line with international norms to include foreigners in its social security net.

China’s rules will make it more like policies in many European Union countries, where citizens and foreigners alike pay into the system.

China’s existing social security net offers meager protection for its own citizens, especially compared with some of the more generous schemes in Europe.

Reporting by Ben Blanchard; Editing by Paul Tait

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