context: Significantly lower than developed countries, the average retirement age in the PRC is approximately 55. In the US and Japan, it's moving towards 67 years old, a gap of around 11–12 years. The recently foreshadowed extension of retirement ages is controversial.
PRC expert Zheng Bingwen 郑秉文 explains the deep dilemma faced in providing pensions for the ageing workforce. He urges careful reforms in the PRC's pension system to address demographic change, ensure financial sustainability and support long-term economic development
- the PRC is planning to gradually delay the statutory retirement age
- the new policy emphasises 'voluntariness and flexibility'
- the delay will be implemented gradually over time
- this approach considers the current economic situation and family burdens in the PRC
- impact on employment
- delayed retirement will have minimal impact on overall employment
- public sector
- only a small fraction of graduates compete for these positions
- private sector
- employment is more dependent on economic development than retirement age
- third pillar of pensions
- launched in November 2022
- high coverage rate (22.6 percent in pilot cities), but low contribution amounts
- issues include economic downturn, income reduction and low pension returns
- suggestions for reform
- improve the capital market to boost returns
- expand the range of pension financial products
- consider allowing some exemptions for certain financial products to improve yields
- potentially include large national projects as investment options for pensions
- long-term capital
- the PRC lacks sufficient long-term and patient capital compared to developed countries
- this is crucial for tech innovation and competitiveness in the 21st century
- current fiscal constraints make it challenging to leverage social capital for investments