Governments raise retirement ages as workforces shrink

In China, employees will have to work further into their sunset years before cashing in on pension benefits due to a government plan to increase the national retirement age incrementally. The communist country, famous for its decadeslong one-child policy that it later amended to allow two and then three children, joins a trend of countries pushing back retirement to combat hemorrhaging pension funds as populations age and birth rates dwindle.

On Sept. 13, the Chinese Communist Party approved the plan, which The New York Times called “broadly unpopular,” to take effect gradually over a 15-year period beginning on Jan. 1. For men, the retirement age will rise from 60 to 63. Female white collar workers have to wait to retire at 58 or older instead of 55, and female blue collar workers at 55 instead of 50. The plan, which represents the first time China has raised the age in over 60 years, amounts to about one more month of work every four months.

China’s new retirement ages are still lower than what’s typical across the globe. The Organization for Economic Cooperation and Development puts the global average retirement age at 64 for men and 63 for women.

Other countries have also recently bumped up minimum retirement ages, often sparking pushback from citizens. In 2023, France changed its retirement age from 62 to 64, provoking some 500,000 people to march along the Paris streets and call for President Emmanuel Macron’s resignation. In 2018, Russian President Vladimir Putin raised the retirement age from 60 to 65 for men. He announced that women would have to retire at 63 instead of 55, but he later backpedaled to 60 because of widespread demonstrations.

According to Richard Johnson, director of the retirement policy program at the Urban Institute, raising a country’s retirement age isn’t necessarily a sign of economic weakness. It could mean that life expectancy is improving. Life expectancy in China has nearly doubled since the 1950s when the country’s current retirement parameters were first introduced. By 2035, roughly 400 million people in China will be older than 60. That number is projected to peak at nearly 54 percent of the population in 2080.

But pension plans also become stressed when the eligible workforce begins to shrink, and China’s birth rates are dangerously low. Since 2016, China’s one-child rule is no longer a mandated policy, but decades of cultural norms aren’t undone right away. In 2023, the country still had a fertility rate of 1.0. Also last year, China reported 9 million births and 11 million deaths.

Declining birth rates also played a role in Russia’s and France’s decisions to delay pension eligibility.

China’s plan will be phased in gradually, possibly a calculated move on the part of President Xi Jinping to avoid protests. Workers have an option to retire three years ahead of schedule, provided they have contributed to pension funds for at least 20 years. The minimum contribution timeline will increase gradually from 15 to 20 years starting in 2030.

Even without these features, the announcement likely won’t set off a Parisian-style outcry, partly because of the country’s heavily censored media. Per The Economist, users on the Chinese social media site Weibo posted over 5,100 comments under the government news agency’s announcement about raising the retirement age. As of Sept. 17, censors had whittled the post’s responses down to only 30 comments, all of them positive.

But for many Chinese citizens, retiring early was never an option anyway. The roughly 300 million people living in rural China are due to receive only 200 yuan, or $28 a month, when they retire, which legally could be as early as 60.

Delaying the payout timeline might help to squeeze what’s left in pension funds a bit longer while delaying the inevitable since the funds will likely deplete in about a decade. Even with the new retirement benchmarks, some 300 million Chinese will leave the workforce in the next 10 years.

The United States is also facing a dramatic change in demographics. By 2050, the number of Americans older than 65 will increase by 47 percent. Johnson of the Urban Institute doesn’t believe it will prompt a change in the retirement age anytime soon, since the United States already has a fairly high retirement age thanks to a policy change enacted in 1983. For those born after 1960, full retirement benefits now kick in at age 67, up from 65.

Even so, Johnson notes the reality that Social Security is overburdened because of an aging population and fewer babies being born. Right now, there are about three workers per retiree. He projects that, by 2030, two workers will support each retiree.

“The fact that the population is aging isn’t so terrible, said Johnson. “To the extent that it reflects declines in fertility, that is a warning sign.”