Hong-Kong
CNN
—

Chinese workers have been ending their working lives at a relatively young age for decades, with men reaching retirement age at 60 and women at 50.

But that is all set to change after the Chinese government passed new legislation on Friday that provides a plan to postpone the retirement age by 15 years, starting Jan. 1, state news agency Xinhua reported.

Existing rules stated that men in urban areas could retire at 60 and receive their pension, and women at 50 or 55, depending on their occupation. The new rules gradually push the age back to 63 for men, and to 55 and 58 for women, respectively.

The measures, approved by the country’s top legislature in July after a signal from a key Communist Party body, also include plans to extend the minimum working period during which workers receive a monthly pension from 15 to 20 years. The changes will take effect from 2030.

There is also some flexibility in the retirement age, especially for people who have already reached the minimum working period.

The change, which the government has been mulling for about a decade, comes as China’s economy slows and Beijing grapples with the looming consequences of a rapidly ageing population and a pension fund crisis.

The announcement immediately sparked widespread discussion – and backlash – on Chinese social media.

Some social media users seemed encouraged that the changes were not drastic and included some flexibility. One comment on the X-like social media platform Weibo that garnered thousands of likes read: “As long as there are options to retire or not based on our will, I have no objections.”

Others expressed dismay at the prospect of delayed access to their pensions and years of additional work, and worried whether the policy would strain China’s already tough labor market, as youth unemployment remains stubbornly high.

“Delayed retirement just means you can’t collect your pension until you’re 63, it doesn’t mean everyone has a job until then!” one user wrote.

Chinese state media have hailed the expected changes in recent days as an urgent and necessary overhaul of an outdated system, stressing that the existing policies have been in place since the 1950s, when both life expectancy and education levels were lower.

“The current pension policy has remained unchanged for 73 years. Especially since the reform and opening-up (from around 1978), the demographic, economic and social landscape has changed dramatically,” demographer Yuan Xin told state media earlier this week.

The current retirement age is seriously at odds with the current “national reality” and the new norm for future economic and social development, said Yuan, who is deputy head of the China Population Association and a demographer at Nankai University in Tianjin.

China’s current retirement ages are lower than those in some major economies. The average standard retirement ages in 2022 in Organisation for Economic Co-operation and Development (OECD) countries were 63.6 years for women and 64.4 years for men.

Other countries are also grappling with how to manage the retirement age. In 2023, major protests erupted in France in response to a government effort to raise the retirement age from 62 to 64. The U.S. is also debating pension reform and gradually raising the retirement age, with Social Security incentives for retirees that delay taking benefits until they are 70.

Demographic and economic challenges

The changes come as Chinese leaders are increasingly concerned about the country’s demographic challenges, which some economists warn could lead the still-developing country to fall into the trap of “growing old before it gets rich.”

China’s population has shrunk in the past two years, with 2023 set to record the lowest birth rate since the founding of communist China in 1949, despite a rollback of the country’s longstanding “one-child” policy from 2016 and government-led efforts to encourage more young couples to have children.

According to a report from the Ministry of Civil Affairs released earlier this month, China’s elderly now account for more than 20 percent of the country’s population. At the end of last year, about 297 million people were aged 60 or over.

Demographers cited in state media have said that the elderly population will account for 30% of the total population by 2030 to 2035. That will likely rise to more than 40% of the population by mid-century – making China a “super-aged society”.

These predictions have led the government to step up efforts to expand elderly care and to increase private sector efforts to create a “silver economy.”

There is also increased attention to the extent to which the country’s pension system can accommodate a shrinking workforce, alongside a rapidly ageing population.

A 2019 report by the Chinese Academy of Social Sciences, a top government think tank, predicted that China’s state pension fund would run dry by 2035 due to a shrinking working population. Years of severe pandemic-related restrictions that have drained local governments’ coffers could make the pension shortfall even worse.

Early last year, thousands of senior citizens protested in several major cities against drastic cuts to their health insurance, fearing that local governments would tap into their individual savings accounts to cover shortfalls in the state pension fund.

Even for working-age people, employment remains a major challenge after the pandemic and a series of government-led industrial crackdowns in recent years. In July, the youth unemployment rate reached 17.1% among those aged 16 to 24 who are not students, and was 6.5% for those aged 25 to 29 that month, according to state media.

Employers remain cautious about hiring as the economy slows and people, especially in the tech sector, notice widespread age discrimination when hiring workers aged 35 and older.

The new regulations also call on the state to “support youth employment and entrepreneurship, strengthen the development of employment positions for older workers… and strengthen the prevention and management of age discrimination in the workplace.”