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China eyes retirement age raise

China is planning to raise its retirement age to cope with the country’s rapidly aging population, the state-backed Global Times said on Tuesday, citing a senior expert from China’s Ministry of Human Resources. However, the communist country will approach the issue with caution, raising the retirement age in stages.

Jin Weigang, president of the Chinese Academy of Labor and Social Security Sciences, said China was eyeing a “progressive, flexible and differentiated path to raising the retirement age”, meaning that it would be delayed initially by a few months, which would be subsequently increased.

“People nearing retirement age will only have to delay retirement for several months,” the Global Times said, citing Jin. Young people may have to work a few years longer but will have a long adaptation and transition period, he added.

China is reportedly planning to raise its retirement age gradually and in phases to cope with the country's rapidly aging population.#China | #retirement

— The Jerusalem Post (@Jerusalem_Post) March 14, 2023

China in numbers

China’s retirement age is among the lowest in the world at 60 for men, 55 for white-collar women, and 50 for women who work in factories.

The country’s 1.4 billion population aged rapidly, because of a policy that limited couples to having only one child from 1980 to 2015, with anyone who did not comply with the regulation having to abort their second baby or keep it a secret until the child was born.

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Furthermore, life expectancy has risen from around 44 years in 1960 to 78 years as of 2021 and is projected to exceed 80 years by 2050.

China’s National Health Commission expects the number of people aged 60 and over to rise from 280 million to more than 400 million by 2035.

At present, each retiree is supported by the contributions of five workers. The ratio is half what it was a decade ago and is trending towards 4-to-1 in 2030 and 2-to-1 in 2050.

Pension budget under pressure

Now the pressure on China’s pension budgets is escalating, creating more urgency for policymakers to address the situation.

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11 of China’s 31 provincial-level jurisdictions are running pension budget deficits, finance ministry data show. The state-run Chinese Academy of Sciences sees the pension system running out of money by 2035.

Demographers and economists say that the current pension system, which relies on a shrinking active workforce to pay the pensions of a growing number of retirees, is unsustainable and needs to be reformed.

Pensions in Europe

Meanwhile, some governments in Europe seem to find themselves in a similar situation. Currently, France is trying to introduce changes to the pension system in the country, raising the retirement age from 62 to 64.

This action sparked country-wide protests, which are still going on in many French cities. Most recently trash collector unions in Paris went on strike leaving the city with mountains of garbage lying on the street.

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