HONG KONG, Sept 13 (Askume) – China’s top legislative body has approved a proposal to raise the state retirement age, state news agency Xinhua said on Friday, overturning decades of legislation aimed at combating economic pressure from a shrinking workforce.
China’s current retirement age is one of the lowest in the world.
Life expectancy in China has risen from about 44 years in 1960 to 78 years in 2021, and is expected to exceed 80 years by 2050, so improvements are imperative. At the same time, the working population needed to support the elderly is declining.
The retirement age for men will be raised from 60 to 63, and the retirement age for female white-collar workers will be raised from 55 to 58. For women in blue-collar jobs, the period will be extended from 50 to 55 years.
These changes will come into effect from January 1, 2025, and will be in force for 15 years.
Letting people work longer would ease pressure on pension budgets as many Chinese provinces are already facing huge deficits. But delaying pension payments and forcing older workers to work longer may not be to everyone’s liking.
China’s top lawmakers discussed the topic on September 10, and millions of people subsequently raised the issue on social media, Xinhua news agency reported. Many worry that too few job vacancies will lead to more job seekers coming forward.
Peng Xiujian, a senior researcher at the Policy Research Centre of Victoria University in Australia, said that by raising the retirement age, the government can boost the labour force participation rate, which will help mitigate the adverse effects of population aging.
“The government must take action. If the population continues to decline, the labor force will decline, which will have a negative impact on economic growth.”
Jing Zhaopeng, senior China strategist at ANZ Bank, said the move would not have much impact in the short term but would help maintain stable productivity growth in the long term.
What do population ageing and rejuvenation mean for the global economy? Listen to this week’s episode of the Askume Economic World podcast .
Pension Issues
The retirement age will be gradually raised and adjusted from next year, but full implementation will take 15 years, Wang Xiaoping, minister of the Ministry of Human Resources and Social Security, said on Friday.
This would be done on a flexible and voluntary basis, with employees having the option of retiring early or extending their retirement period by up to three years, he said.
Peng Xiaolong, chief economist at Jones Lang LaSalle (China), said the number of retirees is rising and the number of active workers is declining as the retirement age is getting higher.
In China, officials estimate that the number of people aged 60 and over will rise from 280 million to more than 400 million by 2035, equivalent to the combined populations of the United Kingdom and the United States.
According to Finance Ministry data, 11 of China’s 31 provincial-level regions have pension budget deficits. The state-run Chinese Academy of Sciences said the pension system could run short of funds by 2035 if further improvements are not made.
China’s move narrows the gap with Japan and South Korea, where residents can receive pensions at ages 65 and 63, respectively.
