On 20 February 2020, the State Council held a press conference to outline a special policy to permit companies to reduce, eliminate or defer the payment of contributions to their employees' pension funds, unemployment insurance, work-related injury insurance, basic medical insurance and housing provident funds for a limited time, depending upon the size and location of the enterprise and the type of social insurance, during the Covid-19 epidemic.

According to a report on the press conference all enterprises in Hubei Province, as well as small and medium-sized enterprises outside Hubei Province, are permitted to make no contributions to pension funds, unemployment insurance and work-related injury insurance from February through June 2020.

Large enterprises outside Hubei Province may reduce contributions to employee pension funds, unemployment insurance and work-related injury insurance by one-half from February through April 2020.

Enterprises with serious difficulties in production and operation due to the epidemic may apply to postpone payment of these contributions for up to six months without penalty.

In relation to basic medical insurance, the policy permits each provincial level government to reduce the premium payments of enterprises within their jurisdiction by one-half for up to five months beginning in February 2020, depending on the actual situation in their respective region.

The policy also permits all enterprises in all provinces to apply to defer payment of housing provident fund contributions through the end of June 2020. During the deferred payment period, the time for making deposits will continue to be calculated without affecting the normal withdrawals and applications for housing provident fund loans of employees. Companies in areas where the epidemic is severe may make voluntary contributions after consulting with employees.

For a detailed explanation of China's social insurance system, see Practice note, Social insurance: China.

For more related information, see our new series of Articles on the impact of the coronavirus outbreak.

Source: Government website, State Council press conference on the joint prevention and control mechanism introduces the phased reduction and exemption of enterprise social insurance premiums: exemptions, reductions and deferrals are expected to exceed 500 billion yuan.