China is looking into pushing back the statutory retirement age, a spokesperson of the China Ministry of Human Resources and Social Security told media at a press conference held on Friday.
The Ministry’s spokesperson, Li Zhong, indicated that retirement age may be raised in stages, and referred to the proposed retirement age reform as a necessary development in China’s evolving economic and social structure.
Li said pushing back retirement age is an obvious strategy for China’s aging population. He also added that as life expectancy has significantly improved in the past several decades, from an average of age 42 in 1949, age 55 in 1957, to an average of age 75 today, retirement age should keep up with this. Xinhua news agency published details of Li’s speech.
The statutory retirement age in China is set based on laws that go as far back as 1955, and the most recent change was made more than a decade ago. General statutory retirement age in China is 60 for men, and for women, 55 or as early as 50 for blue-collar women. In comparison, a normal retirement age is 65 in the United States, and in Japan, retirement can be as late as age 70.
Addressing the economic challenges of an aging population is an important agenda for China, and is one of the focus areas identified in the Third Plenum meetings in November 2013. Given China’s population and rapidly aging demographics, delaying the statutory retirement age in line with such other markets would clearly translate into tremendous economic potential for the country and, in turn, the global economy.
The Ministry also announced a 10 percent increase on pension payments for retirees of private enterprises, with effect from January 1, 2014. The increase was determined based on factors such as the average increase in wages, inflationary pressure, current level of pension payments, and funding.
This will be the tenth year that the China government has required increase in the amount of pension payments that private enterprises make to retirees. In 2005, the average pension amount was just 714 yuan for urban population. With the increase just announced, this may go up to an average of 2000 yuan.
Yet, there remain concerns that the increase may not be sufficient to beat inflation, as the Consumer Price Index continues to inch up as in recent years. Based on data from the China National Bureau of Statistics, the level of minimum wage in the country increased by an average of 9.7 percent in 2013, but just 7 percent in real terms. An established framework for pension payments to be regularly adjusted to align with the rate of inflation is still to be developed.
Li also said the Ministry will continue to review China’s overall social security system, including funding levels, urban and rural social security schemes, and developing a multi-pillar social security net.