HONG KONG, Sept 17 (Askume Breakingviews) – China is joining global efforts to raise the retirement age. However, new restrictions approved by lawmakers last week embody a utopian notion of ageing that is inconsistent with the People’s Republic of China’s shrinking workforce.
The male retirement age will be raised from 60 to 63. White-collar jobs for women will rise from 55 to 58 and blue-collar jobs from 50 to 55. It replaces a model designed in the 1950s, when average life expectancy in China was just under 40 years. That number has risen to more than 78, compared with about 76 in the United States, according to the World Bank.
Chinese planners recommended raising the retirement age in 2013. About 70% of people opposed the idea at the time, according to a People’s Daily survey. Officials taking action now demonstrate their determination to address financial problems.
By the end of 2023, mandatory retirement funds set up by local governments will reach 7.8 trillion yuan (US$1.1 trillion), covering more than 1 billion policyholders. These authorities are under financial pressure. Meanwhile, the Chinese Academy of Sciences warned in 2019 that the pension system could run out of money by 2035 , as the number of pensioners is expected to rise from 280 million to more than 400 million within 10 years.
Still, China’s revised plan is generous and the changes will be implemented gradually over the next 15 years. For example, workers in Japan and France must contribute to state pension assets for more than 40 years before receiving benefits. By comparison, China’s most recent reform took 20 years.
Beijing has good reason to proceed cautiously. Limiting the number of retirees would reduce China’s working-age population, which has been declining since 2012. The proportion of people aged 16 to 59 in the total population fell to 61.3% last year and is set to rise to 62% in 2022, according to data from the National Bureau of Statistics. That will intensify competition for jobs in economies where growth is slowing.
There is no sign of the nationwide protests that followed China’s pension reform last year abating. China’s policymakers may need to worry more about the negative impact on consumer confidence as the country’s population grows older than it grows richer.
Referral Information
China’s top legislative body approved a proposal to raise the national retirement age on September 13. The retirement age for men will be raised from 60 to 63, while for women in white-collar jobs it will be raised from 55 to 58. For women in blue-collar jobs, the age will be raised from 50 to 55.
