Delayed retirements: China's answer to pension woes

Faced with a rapidly ageing population and a pension crisis, China plans to increase its extremely low retirement age, allowing people to work longer.

Presently, men in urban areas can retire at 60 and are eligible to receive a pension from state-backed funds.

While the retirement age for female urban workers is 50 or 55 depending on their occupation.

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However, the rural residents in China fall under a different retirement system.

The announcement of Beijing's plans to raise the retirement age on Sunday (Jul21) has provoked strong criticism.

“In accord with the principles of voluntariness and flexibility, we will gradually and systematically advance the reform of progressively delaying the legal retirement age,” China’s ruling Communist Party said on Sunday.

Notably, the plan, together with crucial reforms, was officially released in a resolution which was issued three days after the conclusion of China's third plenum—a significant political conference held every five years in Beijing.

The country already struggling with a declining birth rate and an ageing population, and the policymakers have been discussing increasing the retirement age for over a decade.

At the 2013 plenum, a top decision-making body of the Communist Party said that it is now essential to come up with a policy to delay the retirement age.

Though the government did not officially announce any details over the weekend, however, according to a report by the Chinese Academy of Social Sciences released in December last year, a top government think tank estimated that the retirement age will be revised to 65 years.

Interestingly, in 2019, the same think tank predicted that China’s state pension fund would run dry by 2035 because of its declining workforce.

It may be mentioned here, that in early 2023, widespread protests erupted in several major urban centres as elderly residents rallied against significant reductions in their medical benefits.

Driven by concerns that local authorities were raiding their personal pension accounts to address state pension fund deficits, retirees expressed their outrage.

(With inputs from agencies)