五险一金是什么？

English (for the teacher)

As soon as she graduated from university, Cheng Yue joined a company in Shanghai; her contract said her monthly salary was 10,000 yuan. On the day her first pay came in, she stared at the text message on her phone for ages: just over 8,000. Where did the money go? She opened her payslip and found a long list of deductions, and at the very top were four characters: 五险一金, the five insurances and one fund.

The 'five insurances' are five kinds of social insurance: pension, medical, unemployment, work-injury and maternity insurance; the 'one fund' is the housing provident fund. Job adverts often put 五险一金 under 'benefits', but it is actually an obligation set by law: employers must pay social insurance for their staff, and the housing fund has its own regulations too. What comes off each month is only the employee's share; the employer pays a separate share on top, and it is usually larger than the employee's.

Taking Cheng Yue as an example, her own share looks roughly like this: 8% for pension, about 2% for medical insurance, about 0.5% for unemployment insurance, and for the housing fund somewhere between 5% and 12%, set by the employer. The exact rates differ a little from place to place. Work-injury and maternity insurance are paid entirely by the employer; employees pay nothing themselves. If the housing fund is paid at 7%, a 10,000-yuan salary first loses over 1,700 yuan; the rest is still above 5,000, so income tax is due as well. That is how the 'just over 8,000' in the text message was worked out.

So has this money simply vanished? Not at all. Pension insurance is what lets you draw a monthly pension after retirement, and the employee's share goes into a personal account. Medical insurance means part of the cost of seeing a doctor or staying in hospital can be reimbursed. If you didn't quit of your own accord but lost your job for some other reason, then as long as you have paid unemployment insurance for a full year, you can apply for unemployment benefits. Work-injury insurance protects employees who are hurt because of their work. From 2019, maternity insurance was merged with medical insurance in one region after another, which is why you now often hear people say 'four insurances and one fund' too.

What young people care about most is often the housing fund. It's like a piggy bank just for housing: whatever the employee pays in, the employer pays in too, and both go into the employee's own housing fund account. When you buy a home you can apply for a housing-fund mortgage, at a lower interest rate than an ordinary commercial loan; in many cities, people who rent can also take this money out to pay their rent. So for Cheng Yue, the 700 yuan taken off each month actually adds 1,400 yuan to her account.

Is it the same for foreigners? Under national rules, foreigners legally employed in China should also take part in social insurance; as for the housing fund, practice differs from place to place.

Of course, not everyone thinks it's a good deal. Some feel that money in their own hands gives them more freedom, especially young people who have just started work on a low salary; others see it as invisible long-term savings whose weight only shows when you fall ill, lose your job or retire. So when looking for a job, many people make a point of asking: 'Does it come with 五险一金?'

Later, Cheng Yue worked it out: most of those 1,700-odd yuan hadn't disappeared; they had just moved somewhere else, waiting for her future self. Next time your pay comes in, will you still look only at the number in the text message?