China to Raise Retirement Age, Starting in 2025
The new limits are aimed at stretching retirement resources to support the increasingly aged population.
For the first time since the 1970s, China will in 2025 begin “gradually raising” the national retirement age as it looks to stretch dwindling pension funding further to sustain its aging population.
The Standing Committee of the National People’s Congress approved proposals to raise the statutory retirement age gradually over the next 15 years. Individuals will not be able to retire earlier than the statutory age and will only be able to delay retirement by three years.
The retirement-age plan follows modelling from the Chinese Academy of Social Studies that found the main state pension fund will run out of money by 2035 if nothing is done. China’s public pension cost is estimated to currently be more than 5% of its GDP.
For men, the retirement age will rise to 63 from 60. For women working in blue-collar jobs, retirement age will rise to 55 from 50. White-collar female workers’ retirement age will be lifted to 58 from 55.
Meantime, starting in 2030, employees will also have to contribute more toward the cost of China’s social security program to ensure they receive pension payments. By 2039, they will have to have contributed for at least 20 years to access payments.
An aging and shrinking population is at the core of the decision, driven in part by the country’s one-child policy that ran from 1980 to 2015.
At the end of 2022, China had a population of 1.42 billion, more than 500 million of which was older than 50. As it stands, some 300 million people will retire over the next decade in China.
Meanwhile, the population is expected to decrease by 7.9% by 2050. According to projections from the United Nations, China’s population will fall below 1 billion in 2070 and will have more than halved by 2086. By 2100, the U.N. predicts 52% of the population will be at least 60.
Since 2000, the average life expectancy has increased by about six years to 77.6 years.
This article initially appeared in our sister publication, Financial Standard, which, like CIO, is owned by ISS STOXX.