In a historic move not seen since the mid-20th century, China is set to gradually elevate its retirement age, addressing the challenges of an aging society and a strained pension system. On Friday, the nation’s highest legislative authority endorsed proposals to incrementally raise the statutory retirement age for various segments of the workforce. Women engaged in manual labor will see their retirement age shift from 50 to 55, while those in professional roles will experience an increase from 55 to 58. For men, the retirement age will climb from 60 to 63.
China raises the retirement age for the first time in 70 years as the country grapples with the consequences of ageing population pic.twitter.com/Gg2RNcnyGc
— TRT World Now (@TRTWorldNow) September 13, 2024
Currently, China’s retirement thresholds are among the lowest globally. The newly approved plan is slated to take effect on January 1, 2025, with adjustments to the retirement age occurring every few months over the next 15 years, as reported by state-run media outlets.
Early retirement before reaching the mandated age will be prohibited, according to Xinhua News Agency. However, individuals may choose to defer their retirement by up to three years. Beginning in 2030, employees will be obligated to contribute more to the social security system to qualify for pension benefits. By 2039, they must have accrued 20 years of contributions to access their pensions.
Back in 2019, the Chinese Academy of Social Sciences, a state-run think tank, warned that the country’s principal state pension fund could be exhausted by 2035—a forecast made even before the economic downturn induced by the COVID-19 pandemic. The decision to adjust retirement ages and pension policies stems from a comprehensive assessment of factors such as average life expectancy, health conditions, demographic composition, educational levels, and labor force availability, as detailed by Xinhua.
The announcement has sparked skepticism and dissatisfaction on Chinese social media platforms. One user on Weibo quipped, “In the next decade, we might see another policy pushing retirement to age 80.” Another lamented, “It’s a tough year—middle-aged workers face pay cuts and delayed retirement, while the unemployed struggle to find jobs.”
China said it would gradually raise its statutory retirement age, as the country grapples with a looming demographic crisis and an aging population. READ: https://t.co/0SYZQ3bCXR pic.twitter.com/4MsdcAp1AV
— PhilSTAR L!fe (@philstarlife) September 13, 2024
Some, however, viewed the changes as inevitable. “This was anticipated; there’s little to debate,” commented one user. “In many European countries, men retire at 65 or 67, and women at 60. Our nation is likely following this global trend.”
China is experiencing a demographic decline, with its vast population decreasing for the second consecutive year in 2023 amid falling birth rates. Meanwhile, average life expectancy has risen to 78.2 years, officials noted earlier this year. According to the World Health Organization, by 2040, nearly one-third of China’s population—approximately 402 million people—will be over 60, up from 254 million in 2019.
This unfolding demographic crisis is compounded by a sluggish economy, dwindling government benefits, and the repercussions of the decades-long one-child policy. As our correspondent Laura Bicker observed earlier this year, China’s pension reserves are depleting, and the window to build a sufficient fund for its aging populace is narrowing.
Over the next ten years, about 300 million people currently aged between 50 and 60—the country’s largest age group, nearly matching the entire population of the United States—are set to exit the workforce. This scenario raises pressing questions about who will support them in retirement. The answers vary across different regions and communities within China.
The government’s approach reflects an urgent need to balance economic sustainability with social welfare. By incrementally raising the retirement age and requiring longer contribution periods, China aims to mitigate the financial strain on its pension system while adapting to shifting demographic realities. However, the policy changes highlight the tensions between economic imperatives and public sentiment, as citizens grapple with the implications for their personal and professional lives.
“China approved an increase to its retirement age to 63 for men and up to 58 for women.
The hikes will be spread over 15 years and aim to slow a decline in the labor force—though it risks adding to discontent.” – BBG pic.twitter.com/p4U8lRJVV4
— Ayesha Tariq, CFA (@AyeshaTariq) September 13, 2024
In essence, China’s decision to adjust its retirement policies marks a significant step in addressing the multifaceted challenges posed by an aging population. The effectiveness of these measures will depend on their implementation and the public’s acceptance, as well as the government’s ability to foster economic conditions that support both the elderly and the working-age population.
Major Points:
- For the first time since the 1950s, China will incrementally increase the statutory retirement age due to an aging population and a strained pension system. Women in blue-collar jobs will see their retirement age rise from 50 to 55, women in white-collar jobs from 55 to 58, and men from 60 to 63.
- Beginning January 1, 2025, retiring before the new statutory age will not be allowed, although delaying retirement by up to three years is permitted. Starting in 2030, employees must contribute more to the social security system, needing 20 years of contributions by 2039 to access their pensions.
- The decision is based on factors like increased life expectancy (now at 78.2 years), health conditions, population structure, education levels, and labor force supply. A 2019 report warned that China’s main state pension fund could deplete by 2035, even before the economic impact of COVID-19.
- The announcement has sparked criticism on social media, with users expressing concerns over pay cuts, job scarcity, and the possibility of future retirement age increases. Some acknowledge the change as inevitable, comparing it to retirement ages in European countries.
- China’s population is declining for the second consecutive year in 2023 amid falling birth rates and the legacy of the one-child policy. By 2040, nearly one-third of the population—about 402 million people—will be over 60, raising concerns about who will care for the growing elderly population as the pension fund dwindles.
Fallon Jacobson – Reprinted with permission of Whatfinger News
