Denmark’s Minister for Social Affairs and Integration Karen Hækkerup is ready to sign a social security agreement with China that will exempt Danes in China to pay to the Chinese social pension system.
The agreement means that Danish firms posting employees to China will be exempt for up to three years from paying 28 per cent of the wages of the Chinese social security system. In addition, the posted employee and family members will maintain their rights and accrual of pension in the Danish system.
Social Affairs and Integration Minister Karen Hækkerup says:
“It is important for the competitiveness of Danish companies that they are exempt from paying high contributions to the Chinese old-age pension. Pensions that their expatriate employees will not be able to enjoy. I am therefore pleased that Denmark is the first country to establish a social security agreement with China after the expansion of the Chinese social security system. It is a clear result of the government’s efforts on strategic and intensive cooperation with China. ”
China has a social security system in which both employers and employees pay a significant part of the salary for insurance contributions for pension. From 1 July 2011, the claim for payment to the system extended to apply to foreign workers and foreign companies posting workers to work in China. This has meant that Danish companies in China may have to pay up to 40 per cent of the employee’s salary in social security contributions.
The Minister expects to sign the final agreement on social security during a visit to China in the autumn, after China has completed its internal approval process.