MCLC: Changes in retirement age

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Changes in retirement age
Source: China Real Time, WSJ (3/10/15)
China Sets Timeline for First Change to Retirement Age Since 1950s
By Chun Han Wong
Retirees dance at Tiantan Park in Beijing, China, on Sunday, March 8, 2015. Bloomberg News
After hinting for years that China’s workers would need to delay retirement, Beijing has finally set a timeline for the move — a gradual, multiyear process aimed at easing social and fiscal pressures stemming from the country’s rapidly aging population.
Detailed plans for raising China’s statutory retirement age would be unveiled in 2017, though the measures would take five more years to take effect, Yin Weimin, the country’s minister in charge of human resources and social security, said Tuesday.
The ministry proposes to raise the retirement age by a few months each year, taking a steady approach to the first revision of China’s official retirement policy since the 1950s, Mr. Yin said at a news briefing on the sidelines of an annual parliamentary meeting.
In China, men currently can retire at 60 years of age, while women who work in factories can retire as early as 50. Female public-sector workers can retire at 55. Changes to these rules would only be made after public consultation next year, Mr. Yin said.
His comments shed fresh light on China’s plans for slowing a long-term decline in its labor force and alleviating the accompanying pressures on its public finances. While many officials and economists have long advocated delaying retirement to help the country cope with its swelling elderly population, few citizens welcome having to spend more years in the work force.
“There is currently no societal consensus on this issue,” Mr. Yin told reporters. In an effort to assuage public unease, increases to the retirement age would be implemented in “small, gradual steps” that help citizens adjust to the change, he added.
State researchers have suggested raising the retirement age by three months every year over the next decade. Mr. Yin, at Tuesday’s briefing, said one potential scenario might involve a two-month increase in the first year followed by another four months the following year.
Some analysts say the government may first raise retirement ages for females, bringing them level with their male counterparts before making further changes.
“Different approaches would be taken for different sectors, so as to ensure a smooth implementation,” said Qiao Jian, a labor expert at the China Institute of Industrial Relations in Beijing. “Female teachers and public servants would lead the way, and females workers would eventually follow.”
Regardless how the government eventually implements its plans, the social media reaction to Mr. Yin’s comments suggests that officials would have a tough time winning over hearts and minds on the matter. On the Weibo microblogging service, dissenting voices appeared to outnumber those that support delaying retirement.
“Raising the retirement age is a silly idea,” a Weibo user wrote. “We should be raising youth-employment rates instead; if the elderly don’t retire, how will young people find job opportunities?”
It also isn’t clear if the ministry’s plan can dent the debilitating effects from China’s shrinking work force, even as officials acknowledge the high stakes involved.
China’s pool of working-age people – ages between 16 and 59 – started shrinking in 2013 and is set to continue doing so, which would impose growing burdens on the country’s pension system. People aged 60 and above are projected to make up nearly 39% of the country’s population by 2050, up from roughly 15% currently, according to Mr. Yin.
Currently, three working people are supporting each retiree, but that ratio will tumble to about 1.3 workers for each retiree by 2050—a trend that would put further strains on China’s public finances and social-security system, Mr. Yin said.
To address this, the government will expand the coverage of social insurance and boost returns on the country’s pension fund. “We will look at some opportunities with higher returns but will contain risks,” the minister said, without giving details.
For now, though, China’s pension funds are still able to meet their obligations to retirees, according to Mr. Yin. For instance, in 2014, China’s private-sector pension fund received 2.33 trillion Chinese yuan ($372 billion) in revenue and paid out 1.98 trillion yuan, closing the year with a net fund size of 3.06 trillion yuan, the minister said.
For years, critics have accused the government of shortcomings in its management of China’s national pension fund, raising the risk that current workers and future retirees who’ve already paid into the system won’t be able to receive payments.
In a recent study, a researcher at the state-backed Chinese Academy of Social Sciences said the pension fund could have earned billions of dollars more if the government had put its money to better use, instead of just depositing them in banks and investing a small portion in government bonds.
— Chun Han Wong, with contributions from Liyan Qi. Follow Chun Han on Twitter at ByChunHan.
by denton.2 at osu.edu on March 12, 2015
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