China to Delay Retirement Age in Bid to Ease Pension Fund Crisis: Experts

Chen Xiangying (second L), 92, draws her first pension payment from a bank on September 28, 2006 in Shanghai, China.China Photos/Getty Images

China plans to change the mandatory retirement age of its citizens, as part of efforts to alleviate its pension fund crisis that has worsened in recent years due to an increase in the country’s aging population.

On Feb. 21, China’s State Council announced that it would implement a gradual delay in the legal retirement age, and acknowledged that China’s aging population is mounting rapidly.

The aging population has become a pressing issue in China. According to Jan. 17 data by the Bureau of Statistics, in 2021, China’s working-age population of 16 to 59 accounts for 62.5 percent of the total population; those over 60 account for 18.9 percent; and over 65 is 205.6 million, about one-seventh of the population, showing a rise of 14.96 million over the 2020 national census.

Shandong and Jiangsu Provinces were the first to implement “gradually delayed retirement” in January and March, respectively. The official documents stipulated that the minimum time of postponing retirement is to be no less than one year.

Chinese authorities are likely counting on raising the current mandatory retirement ages of 60 for men, 55 for female office workers, and 50 for female blue-collar workers, and thereby reducing the number of retirees who will consume pension funds.

The current compulsory age of retirement for Chinese is one of the lowest in the world, much lower than the average of 64.2 in most developed countries. However, in the 1950s when the Chinese Communist Party took power, the average life expectancy in China was only 35 years, that is, the government seemed to require Chinese people to work until they died since the compulsory retirement age was 50-60.

Chinese authorities are reconsidering the compulsory retirement age now that Chinese people’s life expectancy has increased. According to data released by China’s National Health Commission, the average life expectancy of Chinese residents reached 77.3 in 2019.

Xia Yifan, a China expert based in Japan, told The Epoch Times that delaying the retirement age is related to the pension funds crisis.

China is facing a transition in its population from aging to deep aging, which may be considered from 60 to 65 and over, and raising the retirement age can ease the pressure on pension funds. “In 2017, China’s pension funds balance was only 10.3 percent of the country’s GDP, while the U.S. balance was 160 percent of its GDP during the same period. This contrast shows the extent of corruption among Chinese officials. The Chinese Communist Party (CCP) should give the Chinese people an explanation for this,” Xia said.

Chinese portal site Sina reported in 2012 that Cai Fang, director of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, said that delaying retirement age has a dual purpose, as it can both increase labor supply and reduce pension expense.

The report also mentioned that Zheng Bingwen, director of the Social Security Center of the Chinese Academy of Social Sciences, said that by end of 2011, the total amount in the retiree accounts increased to 2.5 trillion yuan ($390 billion), while the National Pension Fund has a deficit of $2.23 trillion ($350 billion) and is failing to cover the need. This indicates that the money needed for future pension funds is almost non-existent.

Zheng estimates that for each year the regime delays the retirement age, it can close a 20-billion-yuan ($3.17 billion) pension fund gap.  He believes that delaying the retirement age is a trend that can alleviate the pressure on the pension funds to a certain extent but cannot be counted on to completely solve the problem.

“Officials and the privileged classes of state-owned enterprises enjoy high salaries, are corrupt, and squander public monies, while investing very little in the retirement [needs] of the grassroots,” Xia said.