New policy aims to ease pension strain as China faces rapid population decline and an aging workforce
China is set to raise its retirement age for the first time since the 1950s, with men and women working up to five years longer starting in 2025. This move comes as the nation grapples with a slowing economy and the pressures of an aging population.
The Standing Committee of the National People’s Congress approved the policy, which will gradually extend retirement age over the next 15 years. By 2035, the retirement age for men will increase from 60 to 63, while women, who currently retire at 50 or 55 depending on their job, will now retire at 55 or 58. The staggered rollout will depend on birthdates.
The decision is designed to alleviate the financial burden on China’s pension system, which faces significant strain. Eleven of the country’s 31 provinces are already reporting pension budget deficits, and experts warn that without reform, the national pension fund could run dry by 2035.
Xiujian Peng, a senior research fellow at Victoria University in Australia, noted that China’s retirement system was originally established when life expectancy was around 40 years. Today, with more citizens reaching retirement age and fewer younger workers to support them, the need for change is urgent.
China’s population is both shrinking and aging at an alarming rate. By 2050, analysts predict the country will have 500 million people over the age of 60. Meanwhile, younger generations are opting for smaller families or no children at all, contributing to the demographic decline. In 2022, China’s population shrank for the first time, with 850,000 fewer people, followed by a further 2 million drop in 2023.
This major demographic shift is expected to pose serious challenges to China’s economic and social stability in the coming decades.
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