State-run newspaper, China Business News has announced that the Chinese government is making a push to raise the country’s retirement ages as it tries to cope with a rapidly aging population, a move that has fuelled public discontent.
The newspaper wrote on its front page that “Delayed retirement is approaching,” and cited unnamed officials who said that a “gradual and flexible approach,” had emerged as a consensus among policy makers.
China’s retirement age has remained unchanged for more than four decades at 60 for men and 55 for female white-collar workers, even as life-expectancy has risen. In places like Japan and Taiwan, most men and women can retire and start drawing a pension at 65.
The announcement produced a fierce backlash domestically, with tens of thousands of angry comments posted on Weibo, China’s equivalent of Twitter
Top among the complaints were from those closest to retiring, expressing anger over the prospect of delayed access to their pensions. Younger people argued that an increase in older workers would reduce their employment opportunities.
The ruling Communist Party of China suggested the change earlier this month when it released an outline of its five-year economic plan, which included a recommendation to “implement postponing the retirement age.”
Experts say raising the age at which workers are eligible for state-supported pensions is crucial for ensuring the sustainability of the retirement system. The Chinese Academy of Social Sciences, a government think-tank, estimated in a report last year that the main pension fund for urban workers will peak at 7 trillion yuan ($1 trillion) in 2027, before declining to zero by 2035. The balance in 2019 was 4.3 trillion yuan.
Additionally, the academy predicted that raising the retirement age would also help China maintain economic growth, by slowing the rate at which the working-age population shrinks as a result of falling birth rates. Beijing estimates the number of people aged 60 or more will approach 487 million by 2050, compared with 254 million in 2019.
Wang Feng, a demographer at the University of California, Irvine indicated that the fact that China experienced a baby boom in the early 1960s means more than 200 million people will reach 60 in the next decade and as a result, China’s leaders will have no option but to increase the pension age during the next five-year plan that begins in 2021.
“A massive number of people will reach this age during the next five years,” he said. “If they don’t act now that would impose a tremendous fiscal burden.”
Some experts are entreating the government to consider other viable options that could be adopted as well.
Wang Xinmei, a pension economist at Zhejiang University said, “We can start from some easy steps, for example, allowing competent people who want to work more to work more years voluntarily,” she said. One proposal is to increase the age by a year each year, though that is “much too fast,” she said. “We could increase faster in the early stage then slowly in the later stage.”