China to Gradually Raise Retirement Age Amid Ageing Population

China has announced plans to gradually raise its retirement age for the first time since the 1950s. This decision comes as the country faces the challenges of an ageing population and a dwindling pension budget. The top legislative body approved proposals to increase the statutory retirement age starting January 1, 2025.

Under the new plan, women in blue-collar jobs will see their retirement age rise from 50 to 55, while those in white-collar jobs will see an increase from 55 to 58. Men’s retirement age will increase from 60 to 63. These changes will be implemented over a span of 15 years, with the retirement age raised every few months.

Xinhua, the state news agency, reported that retiring before the statutory age will not be permitted, although individuals may choose to delay retirement by up to three years. Additionally, starting in 2030, employees will be required to make larger contributions to the social security system to receive pensions. By 2039, a minimum of 20 years of contributions will be necessary to access pension benefits.

The Chinese Academy of Social Sciences warned in 2019 that the country’s main state pension fund might deplete by 2035. This estimate preceded the economic impact of the Covid-19 pandemic, which exacerbated financial concerns. The plan to raise retirement ages is based on an assessment of several factors, including average life expectancy, health conditions, population structure, education level, and workforce supply.

The announcement has sparked skepticism and discontent on Chinese social media, with some users expressing frustration at the prospect of further delayed retirements. Nevertheless, others have remarked that the move was expected given the trends in other countries.

China’s population has declined for a second consecutive year in 2023, with the birth rate continuing to decrease. Officials indicate that by 2040, almost a third of the population, approximately 402 million individuals, will be over the age of 60, up from 254 million in 2019. This demographic shift, coupled with a slowing economy and reduced government benefits, presents significant challenges for the country’s pension system.

Over the next decade, around 300 million people aged 50 to 60 are expected to exit the workforce, raising concerns about who will support them. The answer varies depending on different regions and perspectives within China.