Is retirement possible in China or will the elderly always be working?

Many elderly in China plan to continue working after retirement because the country’s pension system does not provide them with decent living conditions. The pension systems in China have been a concern for the aged with some saying it is not robust enough to support them after they retire.

The facts

Currently, the retirement age for Chinese civil servants’ is 55 for women and 60 for men. By 2030, both men and women are expected to retire at age 65.

Senior citizens in China are now skeptical about retiring because of the need to put body and soul together. Reports reveal that over two-thirds of older individuals in China plan to resume their work after retirement.

China’s aging workforce is a challenge to the country as it poses a threat to the nation’s long-term economic growth model. It includes growth policies that seeks to boost domestic consumption and reining in ballooning debt.

The arguments

At first, China’s pension system was a wholly state-run initiative meant primarily to support the caretaker role adult children that took on for their aged parents.

However, China’s population became older and family ties deteriorated due to rapid urbanization. The Asian country’s pension system was expanded to cover almost 1.05 billion individuals, which is almost the whole population. But there remain some disparities in the allocation of pension funds.

Rural and migrant workers may receive as little as $25 per month in basic pension, whereas retired metropolitan paid employees may receive an average of almost $470 per month.

Three pillars support China’s pension system, the first of which is the state-run basic pension system. Voluntary employee pension plans are in second and third is private voluntary pension scheme.

According to scholars, the public system is already facing severe financial strain, while the corporate and private programmes are still in their infancy. It is not implemented as a national programme, but rather primarily at the provincial level.

With about 300 million people aged over 60 making up 21.1% of China’s total population in 2023 (compared to 280.04 million in 2022), there are growing concerns that the country’s pension system would not be able to keep up without major reform as the country grows older.

The Chinese Academy of Sciences, a state-owned organisation, projects that the country’s pension system would run out of money by 2035. Data from the finance ministry also shows that about one-third of the provinces in the country have deficits in their pension funds.

In 2022, the state council of China released a plan to help the country’s ageing population. The plan called for building of more nursing homes and instituting a new private pension system to facilitate people’s investment in a variety of financial items. Reforms to the pension system, however, have been gradual.

China declared in official policy for 2020 and 2021 that the statutory retirement age would be raised; however, no additional information was provided.

Many citizens have voiced their displeasure and fear at any prospective changes, citing the challenging job market and the current high unemployment rates. Some hold the belief that China can sustainably grow the pension system without weakening it.

Economists have urged that the nation’s disjointed pension plans ought to be consolidated into a more flexible, unified structure.