China has stated plans to increase its retirement age for workers in 2025, addressing its aging population and shrinking workforce.
This move is set to modernize a system with some of the lowest retirement ages among major economies.
The new policy was approved by the Standing Committee of the National People’s Congress, the country’s legislature, and was announced by state broadcaster CCTV on Friday after a sudden review earlier in the week.
The changes will be phased in over 15 years. The retirement age for men will rise to 63, while for women it will be adjusted to either 55 or 58 depending on their occupation.
Currently, men retire at 60, while women retire at 50 in blue-collar jobs and 55 in white-collar roles.
Xiujian Peng, a senior research fellow at Victoria University in Australia, explained, “We have more people coming into the retirement age, and so the pension fund is (facing) high pressure. That’s why I think it’s now time to act seriously.”
He noted that the previous retirement ages were established in the 1950s when life expectancy was around 40 years.
The policy will start in January and will be implemented gradually based on individuals’ birthdates.
For instance, a man born in January 1971 will be eligible to retire at 61 years and 7 months in August 2032, while a man born in May 1971 could retire at 61 years and 8 months in January 2033.
Demographic pressures have made this change necessary. By the end of 2023, China had nearly 300 million people over the age of 60, and this number is expected to reach 400 million by 2035, surpassing the U.S. population.
The Chinese Academy of Social Sciences has previously projected that the public pension fund could be depleted by then.
Similar issues are faced globally; the U.S. Social Security fund is projected to be unable to pay full benefits by 2033.
Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations, pointed out, “This is happening everywhere. But in China with its large elderly population, the challenge is much larger.”
Adding to the challenge is the declining birth rate, as many younger people choose not to have children due to high costs.
In 2022, China’s National Bureau of Statistics reported a decrease of 850,000 people from the previous year, marking a shift from population growth to decline. The population shrank by another 2 million in 2023.
This demographic shift means a smaller workforce will be responsible for funding pensions through deductions from active workers.
The dependency ratio, which measures the number of people over 65 compared to those under 65, was 21.8% in 2022. This indicates that about five workers support one retiree, and this ratio is expected to worsen.
Experts anticipate short-term difficulties from this policy adjustment, particularly as the economy is already facing high youth unemployment.
Public reactions have been mixed, with many comments on social media expressing concern, though only a fraction of the 13,000 comments on the Xinhua news post were visible, suggesting possible censorship.
