Motorists drive during morning rush hour in Beijing on Friday.
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Andy Wong/AP
BEIJING – Starting next year, China will raise the retirement age for workers, now the youngest in the world’s major economies, in an effort to tackle a shrinking population and an aging workforce.
The Standing Committee of the National People’s Congress, the country’s legislature, passed the new policy on Friday after a surprise announcement earlier in the week that it was reviewing the measure, state broadcaster CCTV announced.
The policy change will take place over 15 years, with the retirement age for men reaching 63, and for women reaching 55 or 58 depending on their occupation. The current retirement age is 60 for men and 50 for women in blue-collar jobs and 55 for women in white-collar jobs.
“We have more people coming to retirement age, and pension funds (face) high pressure. That’s why I think now is the time to act seriously,” said Xiujian Peng, a senior researcher at the University of Victoria in Australia who studied. China’s population and its relationship to the economy.
The previous retirement age was set in the 1950s, when life expectancy was only around 40 years, Peng said.
The policy will take effect from January, according to an announcement from the Chinese legislature. The changes will apply progressively based on a person’s date of birth.
For example, a person born in January 1971 could retire at the age of 61 years and 7 months in August 2032, according to a chart released along with the policy. People born in May 1971 can retire at the age of 61 years and 8 months in January 2033.
Demographic pressure is making the move long overdue, experts say. By the end of 2023, China will have nearly 300 million people over the age of 60. By 2035, that number is projected to reach 400 million, larger than the US population. the fund will run out of money that year.
Pressure on social benefits such as pensions and social security is hardly a China-specific problem. The US is also facing this problem because analysis shows that now, the Social Security fund will not be able to pay full benefits to people in 2033.
“It’s happening everywhere,” said Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations. “But in China with its large elderly population, the challenge is greater.”
Those at the top are born less, because young people choose not to have children, because of the high costs. In 2022, China’s National Bureau of Statistics reports that for the first time the country will have 850,000 fewer people at the end of the year than the previous year, the turning point of declining population growth. By 2023, the population will decrease to 2 million people.
That is, the burden of financing the pensions of the elderly will be divided among the younger groups of workers, since pension payments are generally financed by deductions from those who are currently working.
The researchers measured the pressure by looking at a number called the dependency ratio, which calculates the number of people over the age of 65 compared to the number of workers under 65. That number will be 21.8% in 2022, according to government statistics, which means about five workers will support one pensioner. The percentage is expected to rise, meaning fewer workers will shoulder the burden of one retiree.
The necessary course correction will cause short-term pain, experts say, coming at a time of already high youth unemployment and a soft economy.
The 52-year-old Beijing resident, who gives her family name as Lu and will now retire at 61 instead of 60, is positive about the change. “I think this is a good thing, because our society is getting older, and in developed countries, the retirement age is higher,” he said.
Li Bin, 35, who works in the event planning industry, said he was a little sad.
“It’s three years less playing time. I had originally planned to travel around after retirement,” she said. But she said it was better than expected because the retirement age had only been raised by three years for women in white-collar jobs.
Some of the comments on social media when the policy review was announced earlier this week reflected their concerns.
But of the 13,000 comments on the Xinhua news post announcing the news, only a dozen have appeared, suggesting that many others have been censored.
