Beijing raises retirement age amid fears pensions will run out

A shrinking population combined with growing life expectancy has forced the authorities to introduce measures from next year.

China has one of the lowest retirement ages in the world but with life expectancy projected to exceed 80 by 2050, the government has decided to act. Picture: AFP/Getty Images

China will raise the retirement age in an effort to prevent its pension fund running dry, but at the risk of angering people forced to continue working in a slowing economy.

The country’s top legislative body has endorsed a plan that will start in January and take effect incrementally over 15 years. By its conclusion the retirement age for men will have shifted from 60 to 63. Female blue-collar workers will have to wait until they are 55 rather than 50, and white-collar women until they are 58, up from 55.

From 2030 workers will also have to contribute for 20 years, rather than for 15, to claim their retirement pensions.

The slow implementation of the system will reduce its impact on individuals but it will provoke unease among some older workers who complain that, in a tightening labour market, it is becoming harder to hold on to jobs or find new ones.

China has one of the lowest retirement ages in the world, but with an expanding population the system worked. Pensions mattered less in a society of large families in which the young supported their retired parents, who in turn helped working children with the raising of their grandchildren.

Pensions range from a few hundred yuan to about 4000 yuan – approximately $840 – a month, depending on contributions and the type of job.

China’s population peaked at 1.4 billion and in 2022 it began to shrink, but people are living longer. Life expectancy, just 44 in 1960, rose to 78 in 2021 and is projected to exceed 80 by 2050.

As the generation born under the “one-child” policy dominates the workforce, the number of taxpayers contributing to state coffers will continue to fall even as the number of retirees drawing their pensions from them rises. Without a change, the state pension fund will drain more quickly than it fills within a few years and evaporate completely by 2035, according to some estimates.

The retirement age for women will eventually rise to 55 for blue-collar workers and 58 for white-collar workers. Picture: Jade Gao/AFP/Getty Images

Xiujian Peng, of Victoria University in Australia, said: “The government must take action. If the population continues to decline, the shrinking of the labour force will accelerate, negatively impacting economic growth.”

Analysts have played down the impact of the new rules. “The timeline of raising the retirement age is pretty gradual,” said Michelle Lam of Societe Generale, the French-based financial services company. “Policymakers probably have taken into account the potential negative impact.”

But there are objections, especially given the uncertain state of China’s economy, which has bounced back more slowly than western countries after the pandemic, amid concerns about the property market and unemployment.

Open dissent is risky in a country in which those who challenge the government can be locked up. But China Labour Bulletin, a Hong Kong-based campaign group for better labour rights on the mainland, quotes workers who object to being forced to work longer.

It said: “Many blue-collar workers do not support delaying the retirement age because they recognise that such a plan would require them to work for longer and pay more insurance contributions, while they receive little guarantee that they will get more in return.”

The Times