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New Drain on Chinese Economy: Pensions  

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New Drain on Chinese Economy: Pensions  

Pensions are going to be a drain on the Chinese economy, says a media report, and adds that one of the world’s fastest-aging societies, China is bracing for a massive wave of retirements in the coming decade.

Between 1963 and 1975, China witnessed a baby boom with more than 20 million births a year. An estimated 228 million people of this generation will retire over the decade starting this year, Nikkei Asia reported based on Census and other data. For white-collar jobs the retirement age for men is 60 years and for women it is 55 years.  

China had 2.26 working-age people supporting each senior in 2022, but the ratio is forecast to drop to 1.25 in 20 years.

A proposal under consideration would gradually lift the retirement age over three decades to 65 for everyone, aiming to address the shrinking working-age population and the deteriorating finances of the country’s pension system, Nikkei Asia reported.

Zheng Bingwen of the Chinese Academy of Social Sciences sees plenty of room for delaying retirement. “The average retirement age in China is 54, 11 years lower than in industrialized countries,” the report quoted him as saying.

This is not a welcome development for those nearing retirement, especially given deep-rooted expectations of an early exit from the workforce. In a survey by the Life Times newspaper asking what respondents considered a healthy age to retire, an overwhelming 74% majority said, “before 55,” while only 6% said, “61 or older.”

A higher retirement age would leave even fewer jobs available for young people already struggling to find work, the report said adding that Beijing has few other options to keep its social safety net intact.

Nevertheless, the Chinese government is signalling it will tread carefully on the retirement age, lest it become the target of public ire, according to Nikkei Asia report.  Apparently, this is because the  public in China is sensitive to issues that directly affect their lives.  

“We will conduct careful studies and thorough analysis to roll out the policy prudently in due course,” new Premier Li Qiang told reporters Monday after the National People’s Congress when asked about the issue####.