China Reveals Roadmap for Raising Retirement Age

Translation of the document and some of my thought

Today, China revealed its plan to raise its retirement age. In short, Implement a gradual increase in the statutory retirement age over a 15-year period. For male employees, raise the retirement age from the current 60 to 63. For female employees, increase it from the existing 50 or 55 (depending on the category of work) to 55 and 58.

Frankly speaking, I’m not surprised at all, and I was actually expecting my retirement age to be extended to 65 instead of the current 63. For me, it’s kind of a relief to see the news. China had a relatively early retirement age compared with other countries. While it’s facing the problem brought by an aging society with a decreasing domestic birth rate. The old-age dependency ratio, which equals the number of elderly population/number of working-age population, has reached 21.8% in 2023. At the same time, the Total Fertility Rate(TFR) has dropped to 1.0, only higher than in Korea and only less than in Japan.

That brought increasing pressure on the Chinese social welfare system. According to the report published in 2019 by the World Social Security Research Center of the Chinese Academy of Social Sciences, Under the "broad scope" calculation, which includes fiscal subsidies, the accumulated surplus of the national urban enterprise employees' basic pension insurance fund will be depleted by 2035.

Of course, It doesn't mean China will run out of that benefit cause the gov keeps transferring state-owned assets to the social security funds, which will keep bringing new blood for the pool. However, it’s still a big enough problem to alarm the society. That’s probably the main reason behind this change.

We also need to note that due to historical reasons, some retirees in China have not contributed to their social security accounts (It doesn’t mean they did not contribute to society!), resulting in China's pension system essentially operating on a "pay-as-you-go" model. Under this model, pensions have effectively become intergenerational transfer payments. Balancing the interests of different generations and preventing the delayed retirement issue from causing social division remains a concern that requires ongoing attention.

For more, here I attach the translation of the detailed ver

Source:https://www.gov.cn/yaowen/liebiao/202409/content_6974294.htm

State Council's Approach to Gradually Extending the Statutory Retirement Age

Article 1: Effective January 1, 2025, the statutory retirement age will be gradually increased as follows:

• For male employees and female employees whose current statutory retirement age is 55, the retirement age will be extended by one month every four months, eventually reaching 63 and 58 years old, respectively.

• For female employees whose current statutory retirement age is 50, the retirement age will be extended by one month every two months, eventually reaching 55 years old.
  These provisions are subject to any other specific regulations set by the state.

Article 2: Starting January 1, 2030, the minimum contribution period for employees to receive monthly basic pension payments will be gradually increased from 15 years to 20 years, at a rate of six months per year. Employees who reach the statutory retirement age but have not met the minimum contribution period may, in accordance with regulations, extend their contribution period or make a one-time payment to meet the requirement and receive monthly basic pension payments.

Article 3: Employees who have met the minimum contribution period may voluntarily opt for flexible early retirement, up to a maximum of three years before the statutory retirement age. However, the retirement age must not be earlier than the original statutory retirement ages of 50 or 55 for women and 60 for men. Employees who reach the statutory retirement age may, with the agreement of their employer, delay their retirement by up to three years. These provisions are subject to any other specific state regulations. Implementation must respect employees' wishes, and it is illegal to force or coerce employees into choosing a particular retirement age.

Article 4: The state will improve pension insurance incentive mechanisms, encouraging employees to contribute more and for longer periods, with increased benefits for later retirement. The basic pension calculation will be linked to the individual's cumulative years of contribution and actual contributions. The individual account pension will be determined based on factors including the individual's retirement age and account balance.

Article 5: The state will implement an employment-first strategy to promote high-quality, full employment. This includes improving public employment services and establishing a lifelong vocational skills training system. Support will be provided for youth employment and entrepreneurship, job creation for older workers will be strengthened, and employment assistance for disadvantaged individuals will be enhanced. Measures will be taken to prevent and address age discrimination in employment, encouraging employers to hire more older workers.

Article 6: Employers hiring workers beyond the statutory retirement age must ensure basic rights including remuneration, rest and leave, occupational safety and health, and work injury protection. The state will strengthen the protection of rights for flexible employment and new forms of employment. The state will also improve the paid annual leave system.

Article 7: For individuals receiving unemployment insurance benefits who are within one year of the statutory retirement age, the period of unemployment benefit receipt will be extended to the statutory retirement age. During the gradual extension of the statutory retirement age, the unemployment insurance fund will contribute to their pension insurance as prescribed.

Article 8: The state will standardize and improve early retirement policies for special occupations. Employees engaged in underground work, high-altitude work, high-temperature work, particularly physically demanding labor, or working in high-altitude areas, as defined by the state, may apply for early retirement if they meet the conditions.

Article 9: The state will establish an elderly care service system that coordinates home, community, and institutional care, integrating medical and health services. It will also vigorously develop an affordable and inclusive childcare service system.