Elderly people dance at a park in Beijing, China.  (Reuters Photo)

By Chan Ka Sing

HONG KONG- China is joining the global push towards raising the retirement age.

China’s top legislative body on Sept. 13 approved a proposal to raise the country’s retirement age. The retirement age will be raised for men to 63 years old from 60, while for women in white collar work it would be raised to 58 years from 55. For women in blue collar work, it will be increased to 55 from 50.

The new thresholds, however, continue to grasp at a utopian idea of ageing that is not compatible with the shrinking workforce in the People’s Republic.

It replaces a model designed in the 1950s, when Chinese life expectancy averaged below 40. This has since increased to over 78 according to the World Bank, compared to about 76 in the United States.

Chinese planners suggested raising the retirement age back in 2013. At the time, almost 70 percent  of the people opposed the idea, according to a survey by the People’s Daily. The fact officials are acting now points to a determination to tackle fiscal problems.

Mandatory pension funds maintained by local governments amounted to 7.8 trillion yuan ($1.1 trillion) by the end of 2023 and covered more than 1 billion policyholders. These authorities are under financial strain. This pension system, meanwhile, could run out of money by 2035, the Chinese Academy of Sciences warned in 2019, as the number of pensioners is expected to climb in 10 years to over 400 million from 280 million.

Yet, China’s revised scheme remains generous, and changes will only be implemented gradually over the next 15 years. Workers in Japan and France have to contribute more than 40 years to state pension assets before they receive benefits, for instance. This compares with 20 years in China following the latest reform.

Beijing has good reason to tread cautiously. Capping the number of retirees ought to put a floor under China’s working age population which has been shrinking since 2012. People aged 16 to 59 fell to 61.3 percent  of the total population last year from 62 percent  in 2022, per National Bureau of Statistics data. It will also result in more competition for jobs in an economy where growth is slowing. – Reuters