GS Paper - II

The China on 13 September 2024 approved proposals to raise the statutory retirement age from 50 to 55 for women in blue-collar jobs, and from 55 to 58 for females in white-collar jobs. Men will see an increase from 60 to 63. The change will set in from 1 January 2025, with the respective retirement ages raised every few months over the next 15 years.

Why is the government increasing the retirement age?

Declining pension budgets

• The country, which currently has among the world’s lowest retirement ages is facing significant pressure to dole out pensions.
• The pensions are administered at the provincial level with at least 11 of China’s 31 provinces being already burdened with high deficits.
• This step would allow older workers to stay longer at work by delaying pension payouts.
• If they continue at the current rate, the state-run Chinese Academy of Sciences sees pensions running out by 2035.

Increased burden on the employed

• The decline in pension budgets is compounded by the pressure on a decreasing pool of employed workers to support the retired population.
• Reuters reported that each Chinese retiree is now supported by the contributions of five workers, half of what it was a decade ago.

Increasing life expectancy and an ageing population

• China’s life expectancy rose to 78.6 years in 2023, from about 44 years in 1960 (around the time the retirement ages were fixed) and is expected to increase further.
• The population aged 60 and older is expected to increase from 280 million currently to over 400 million by 2035.
• This can be credited in part to China’s one-child policy which remained in place from 1980 to 2015.