China to raise retirement age

According to a report by Xinhua, the Standing Committee of the National People's Congress, China's legislative body, approved a legal amendment bill regulating the minimum retirement age during its bimonthly meeting in Beijing.

With the new regulation, it has been decided to gradually increase the retirement age limit from 60 to 63 for men, from 55 to 58 for female white-collar workers, and from 50 to 55 for female blue-collar workers.

The regulation, which will come into effect on January 1, 2025, will see the age limits raised incrementally every 5 years over the next 15 years.

PLANNING FOR THE DECLINE IN THE WORKFORCE

China, which saw its population decline for the first time in 2022, is experiencing a long-term demographic shift where its population is aging and the share of the working-age population is shrinking. Population experts estimate that the population over the age of 60 in China, which is currently around 280 million, will reach 400 million by 2035.

The working-age population between 16 and 59 in China decreased by 40 million between 2010 and 2020, falling to 879 million. By raising the retirement age limit, which is lower than in many developed countries, China aims to offset future losses caused by a shrinking workforce.

RESTRUCTURING THE PENSION SYSTEM

Currently, the expenses of each retiree in China are covered by contributions from 5 workers. In parallel with the decline and aging of the population, this ratio is projected to fall to 1 to 4 by 2030 and 1 to 2 by 2050.

In a report on the country's pension system, the Chinese Academy of Sciences warned that social security systems in all local governments across 31 provinces and regions in mainland China are running deficits and that the resources in the current pension system will be exhausted by 2035.

News Source: AA