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BEIJING (BLOOMBERG) – China is making a new effort to raise one of the lowest retirement ages in the world as it tries to cope with a rapidly aging population, a move that is already fueling public discontent and will test the ability of the Communist Party to implement reforms.
The ruling party alluded to the change earlier this month when it published an outline of its five-year economic plan, which included a recommendation to “implement the postponement of the retirement age.”
Specific measures of the plan will be announced in March.
China’s retirement age has been unchanged for more than four decades: 60 for men and 55 for white-collar workers, even as life expectancy has increased.
In places like Japan and Taiwan, most men and women can retire and start collecting a pension at age 65. The global average was 62.7 years for men and 61.3 years for women, according to an analysis of 70 countries by the insurer Allianz SE.
The Communist Party’s statement produced a fierce national reaction, with tens of thousands of angry comments posted on Weibo, the Chinese equivalent of Twitter.
The main complaints were those of those closest to retirement, who expressed anger at the possibility of a delay in accessing their pensions. The youngest argued that an increase in older workers would reduce their job opportunities.
Experts say that increasing the age at which workers are eligible for state-backed pensions is crucial to ensuring the sustainability of the retirement system.
The Chinese Academy of Social Sciences, a government think tank, estimated in a report last year that the main pension fund for urban workers will peak at 7 trillion yuan (1.42 trillion Singapore dollars) in 2027. , before declining to zero in 2035. in 2019 it was 4.3 trillion yuan.
Raising the retirement age would also help China maintain economic growth, by reducing the rate of decline in the working-age population as a result of falling birth rates.
Beijing estimates that the number of people aged 60 and over will approach 487 million by 2050, compared with 254 million last year.
China experienced a baby boom in the early 1960s, resulting in more than 200 million people reaching their 60s in the next decade. As a result, China’s leaders will have no choice but to raise the retirement age during the next five-year plan that begins in 2021, said Wang Feng, a demographer at the University of California, Irvine.
“A lot of people will get to this age in the next five years,” he said. “If they don’t act now, that would impose a tremendous tax burden.”
A public backlash derailed an earlier proposal to raise the pension eligibility age in 2012. China’s Ministry of Human Resources and Social Security, which oversees pensions, included a recommendation to raise the retirement age during the current period of the pension. five-year plan until 2020, but not implemented.
While the ministry will be tasked with developing detailed proposals for implementation, the top leaders of the Communist Party should approve the retirement reform, Wang said.
Officials are likely to gradually implement reforms in an attempt to reduce public discontent, for example by applying the changes to some professions or regions before others, he said.
Wang Xinmei, a pension economist at Zhejiang University, cited several other options that could also be taken.
“We can start with a few simple steps, for example allowing competent people who want to work longer to work longer voluntarily,” he said.
One proposal is to increase the age by one year each year, although that is “too fast,” he said. “We could increase faster in the early stage and then slowly in the later stage.”
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