China will gradually raise the retirement age for the first time since the 1950s, a move that is being driven by an aging population and a shrinking pension budget. China is expected to add about 300 million retirees over the next decade.
The highest legislative body in China approved on Friday a proposal to raise the statutory retirement age from 60 to 63 years for men and from 50 to 55 or 58 years for women, depending on the profession. The second of the mentioned variants is to apply to people performing white-collar work.
It currently has one of the lowest retirement ages in the world.LP2 Studio/Shutterstock
Employees will also be able to extend their working lives by up to three years. The changes to the retirement age will be implemented gradually over the next 15 years, starting in 2025. It currently has one of the lowest retirement ages in the world.
Demographic crisis in China
Beijing also plans to raise social security contributions in 2030. From 2039, pensions will only be paid if contributions have been made for at least 20 years.
According to estimates by the National Chinese Academy of Social Sciences the pension fund will be exhausted by 2035.
The plan to raise the retirement age and adjust pension policies was based on a “comprehensive assessment of life expectancy, health conditions, population structure, education level and labor supply in China,” the BBC reported, according to Xinhua.
As BBC correspondent Laura Bicker adds, China's growing demographic crisis has been caused by “a slowing economy, shrinking government benefits and a decades-long one-child policy”. The country is set to add some 300 million pensioners over the next decade.
Working longer would ease pressure on pension budgets in many Chinese provinces, which are already struggling with large deficits. But delaying payments pensions and requiring older workers to stay at work longer may not be welcomed by everyone.
Main image source: LP2 Studio/Shutterstock