China approves major overhaul to raise retirement age
China has approved a plan to gradually raise the retirement age, marking the first such change since the 1950s. This decision responds to growing demographic challenges, including an ageing population and shrinking pension funds. Within a decade, China is expected to have 300 million retirees.
China has chosen a reform path that could significantly alter the labour market situation. According to the plan, which will take effect on 1 January 2025, pensions will be granted at a later age than currently. Women performing physical work will be able to retire at the age of 55, instead of the current 50. For women in office positions, the retirement age will increase from 55 to 58. In the case of men, the threshold will be raised from 60 to 63.
The changes will be implemented gradually over the next 15 years, and early retirement will not be allowed. At the same time, employees will have the option to extend their professional activity by up to three years beyond the statutory retirement age.
China raises the retirement age. New rules
The reform of the Chinese pension system is not limited to raising the retirement age. From 2030, employees will be required to increase their National Insurance contributions to be eligible for pensions. By 2039, the required contribution period will be 20 years, aimed at ensuring the financial stability of the pension system in the long term.
Analysts at mBank note that "China has one of the lowest retirement ages in the world."
The decision to implement these changes was made based on a comprehensive analysis of many factors, including life expectancy, the health status of the population, demographic structure, education level, and labour supply in China. The authorities hope that these measures will help to mitigate the effects of the demographic crisis, which is increasingly affecting the Chinese economy, reports the BBC.
Chinese citizens fear this is just the beginning
The announcement of the planned changes has met with mixed reactions online in China. Some users express scepticism and dissatisfaction, fearing that the retirement age may be further raised in the future. Others, however, point out that such a change was inevitable given demographic trends and solutions adopted in other countries.
China faces serious demographic challenges. In 2023, for the second consecutive year, a population decline was recorded, while the average life expectancy rose to 78 years.
Hundreds of millions of Chinese soon to be of retirement age
Economic slowdown, social benefits limitations, and the long-standing one-child policy have contributed to a demographic crisis, which could have far-reaching consequences for the Chinese economy and pension system.
The new decisions by Chinese authorities have another, more obvious reason. Over the next decade, approximately 300 million people aged 50 to 60 will leave the Chinese labour market. This age group constitutes the largest segment of the country's population, almost as large as the entire population of the United States.
