China is considering gradually increasing its retirement age to address the country’s rapidly ageing population, according to a senior expert from China’s Ministry of Human Resources. Jin Weigang, president of the Chinese Academy of Labor and Social Security Sciences, stated that China is looking at a “progressive, flexible and differentiated path” to increase the retirement age, which means it will be initially delayed by a few months and then increased. According to Jin, people nearing retirement age will only have to delay retirement for a few months, while young people may have to work for a few years longer but with a long adaptation and transition period. The most crucial feature of the reform is to allow people to retire according to their circumstances and conditions.
China has not yet announced any formal changes to its retirement age, which is one of the lowest in the world at 60 for men, 55 for white-collar women, and 50 for women who work in factories. However, policymakers are under pressure to address the escalating pressure on pension budgets as China’s population ages due to the one-child policy from 1980 to 2015. According to the National Health Commission of China, the population of individuals aged 60 and above is expected to exceed 400 million by 2035, which is equivalent to the combined populations of the United States and Britain. Currently, there are 280 million individuals in this age group in China. This demographic shift is partly attributed to the country’s one-child policy, which was in place from 1980 to 2015 and has contributed to a decline in population growth. As a result, there is mounting pressure on the pension system to support an increasing number of retirees with a shrinking workforce, necessitating reforms to address the situation.
Life expectancy in China has risen from around 44 years in 1960 to 78 years as of 2021, higher than in the United States, and is expected to exceed 80 years by 2050. However, each retiree is currently supported by the contributions of five workers, which is half of what it was a decade ago and is trending towards 4-to-1 in 2030 and 2-to-1 in 2050. Economists and demographers argue that the current pension system, which relies on a shrinking active workforce to pay the pensions of an increasing number of retirees, is unsustainable and needs reform.
Finance ministry data show that eleven of China’s 31 provincial-level jurisdictions are running pension budget deficits. Moreover, the state-run Chinese Academy of Sciences predicts the pension system will run out of money by 2035. Therefore, the government is conducting rigorous studies and analyses to implement a policy that is prudent in discourse, according to Li Qiang, the country’s new premier. A gradual and flexible retirement age could be a potential solution to address the country’s ageing population, ensuring sustainable pension budgets, and increasing job opportunities for young people.
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