Retirement Age Remains
Unchanged for Now
By He Na and Chen Xin, China Daily
June 26, 2012
Photo Credit: China
Daily/Retired residents of Huaying
city, Sichuan province, dance in a
park on June 2. More than 10,000
city retirees attend dance events
held by communities every day.
Workers fear they
may be pensioned off in their prime, He Na and
Chen Xin report in Beijing.
Time has been kind to He Yumei. The experienced
nurse has such a youthful complexion that she and
her daughter are often mistaken for sisters. Few
people believe she is 52, just three years away
from one of the mandatory retirement ages for
women in China.
He, who works at a hospital in Jilin city in the
northeastern province of Jilin, has boundless
energy and even the trainees in her department
comment on her high work rate.
"I really can't associate the word 'retirement'
with my mother, and neither can she. She's a
career-oriented person and would definitely be
depressed if she stayed at home every day," said
her daughter Wang Qiao, 22.
"I am in comparatively good health and full of
experience and passion for my work. Why should I
stay at home at such a young age? The average
lifespan in China is over 70," He said.
More important, as a single mother, she's the
family's main breadwinner.
"My daughter needs a lot of money to complete her
further education. My pension would only be half
my current monthly salary of 5,000 yuan ($785) and
would hardly cover our living costs and mortgage.
I heard some people say the retirement age may be
raised. If that's true, I'll raise both hands,"
A proposal to extend the retirement age triggered
heated discussion on the Internet after officials
at the Ministry of Human Resources and Social
Security suggested on June 5 that an extension is
inevitable because of China's continuing social
and economic development and increasing life
"Since the 1970s, the retirement age has been set
at 60 for men and 55 or 50 for women, depending on
their job. That's much earlier than in other
countries. The general retirement age in European
countries is 65," said Xia Xueluan, a professor of
sociology at Peking University in Beijing.
"With life expectancy increasing, there should be
a corresponding change in the pension policy.
However, because the extension will affect
everybody, we need to avoid strict regulations and
implement a voluntary and flexible policy,
depending on people's health and willingness to
work," he said.
"That would be good news for me. Otherwise, I
would have to find another job after retiring to
make ends meet," said He Yumei.
However, an extension is the last thing her
brother-in-law wants. Wang Qizhong, 50, a driver
at a small-scale private tire factory, earns 1,500
yuan in cash per month, but his employer makes no
contribution to his insurance or pension payments.
Every month, Wang has to pay 450 yuan into his
pension account with the local social security
bureau. "My wife and I don't have permanent jobs,
so we have to pay the pension insurance
ourselves," he said.
His wife, 49, who has been laid off, used to sell
vegetables on the street, which is technically
illegal although the authorities often turn a
blind eye. However, the street is not a safe place
for vendors and they play a perpetual game of hide
and seek with the chengguan, urban management
officers, who consider the sellers an eyesore.
"The postponement of the retirement age will make
our lives even more miserable. Even when I work 30
days a month, my wage is still less than my
sister's pension will be. I will be the first one
to go against the policy and will vote for earlier
retirement instead," added Wang.
"Even my neighbor, who's a teacher and is set to
retire next year, doesn't want to leave work. If
the retirement age is raised, people like my
sister and neighbor will continue to enjoy medical
services and various types of allowance. But
people like me, those who don't have stable jobs,
once we lose our jobs, we not only do not have an
income but still have to hand over a lot of money
every month. Do you think we'll applaud an
extension?" he asked.
Started in 1997, China's current pension system
consists of public and individual accounts, both
funded by social security taxes. Employers pay an
amount equal to 20 percent of each worker's wages
each month to fund the public account. Workers
also pay 8 percent of their wages into their
individual accounts. They must contribute for at
least 15 years to become eligible for a pension
and the amount they receive depends on the
earnings that produced the sum in both accounts.
Wang isn't alone in his opposition to the
proposal. A survey conducted by the People's Daily
Web portal on June 11 showed that 93.3 percent of
the 450,000 respondents would vote against a rise
in the retirement age.
In response to the mounting pressure, the ministry
changed its tune on June 19, saying that a
decision has been put in abeyance because more
research is needed, but there is still debate
about when the change should be implemented and
differences of opinion remain about whether the
retirement age should be raised, when it should
happen and what that new age should be.
"An extension of the retirement age would be bad
news for the majority of laborers. Judging by the
experience of other countries, the idea always
receives more support from government officials
and white-collar employees than from blue-collar
workers," said Tang Jun, a social policy
researcher at the Chinese Academy of Social
"For white-collar workers such as government
officials, teachers, doctors, accountants and
engineers, aging means experience and an
accumulated advantage, but for those engaged in
physically intensive labor, aging just means that
work becomes harder. Those people are more
vulnerable and many men lose their jobs when they
reach 50, while women lose out in their 40s.
Without a stable income, where will their pensions
come from?" he asked.
According to Zhao Yingjie, human resources
supervisor at Beijing Fulham Electronic Co, most
of her company's workers are aged between 20 and
35 and only a few on the assembly lines are older
Moreover, 20 to 24 million new workers enter the
labor force each year, but there are only around
10 million new jobs available, 30 percent of which
are the result of natural wastage, according to
Tang, who said an extension of the retirement age
would definitely affect the employment prospects
of young people, especially recent graduates. "If
the retirement age were delayed, 3 to 4 million
jobs would disappear annually," he said.
Further exacerbating the problem, young people
lack the experience and expertise required to move
seamlessly into the jobs vacated by their elders,
said Yang Yansui, director of the research center
of employment and social security at Tsinghua
"Young people's employment would be affected, but
not on a huge scale," she said. "Instead, the
government should make efforts to create jobs in
the tertiary industry, which absorbs most
graduates, and should also encourage young people
to start their own businesses."
The number of Chinese nationals aged 60 or above
reached 185 million last year, accounting for 13.7
percent of the total population, according to
statistics published by the China National
Committee on Aging. By 2015, that figure will hit
221 million, 16 percent of the total population.
The number of people in urban areas receiving a
basic pension had soared to 283 million by the end
of 2011, the Ministry of Human Resources and
Social Security said in a recent report, and there
were more than 68 million new pensioners, a rise
of 5.21 million from 2010.
What's more, a joint study conducted by the Bank
of China and Deutsche Bank suggested that the
aging population will leave the country with a
pension fund shortfall of 18.3 trillion yuan by
2013, creating a heavy fiscal burden, according to
reports by Xinhua News Agency.
Yin Weimin, minister of human resources and social
security, confirmed at a news conference in March
that 13 provinces had pension fund shortfalls in
2011 and the fiscal budget had contributed roughly
180 billion yuan to offset them.
Yu Zhengsheng, the Party chief of Shanghai, told a
meeting last year that the city would allocate
more than 10 billion yuan in its annual budget to
bridge the gap. Meanwhile, to offset the
shortfalls, some local governments are using money
from individual accounts and gradually depleting
them, said Xu Yanjun, deputy director of the
Social Insurance Administration under the Ministry
of Human Resources and Social Security.
Taking those factors into account, if everyone in
China worked an extra year, pension funds would be
boosted by more than 4 billion yuan, while
payments would be reduced by 16 billion yuan,
according to calculations by Zheng Bingwen, head
of the Global Pension Fund Research Center at the
Chinese Academy of Social Sciences.
It sounds like a good deal, so why has it provoked
such strong public opposition?
"The promotion of an extension to the retirement
age should at least satisfy an essential
precondition that our country can solve its
historical pension debt smoothly through the
fiscal system without depending on enterprises and
individuals, but obviously, now is not the right
time," said Zhang Zhanxin, an expert in social
security studies at the Chinese Academy of Social
A report released by Institute of Social Security
under Renmin University of China in 2005 estimated
that the government would have to pay 8 trillion
yuan into the pension pot from 1997 to 2033.
Meanwhile, the China Pension Report 2011,
conducted by CASS, showed that although government
subsidization of pensions has increased rapidly
since 1997 and the accumulated subsidies exceeded
1.25 trillion yuan by the end of 2011, but that's
a drop in the ocean in the face of a debt
shortfall of 8 trillion yuan.
"The government should solve the historical debt
problem first so the public can see how pension
funds were received and spent, otherwise the
pension account will always be a mess," commented
"People are not simply opposed to delaying their
retirement, but they are also against the
inequities inherent in the pension system," said
China operates a "double-track" system. The State
pays the contributions of employees of
governmental organizations and institutions, but
the rules are different for those working for
other enterprises, who have to pay for themselves.
Generally, employees of government organizations
and institutions receive a much higher pension
than enterprise employees.
"The enterprise employees' pension insurance
system was reformed in 1995, but the system for
employees of government organizations and
institutions wasn't reformed at the same time,"
said Zheng Gongcheng, director of China's Social
Security Research Center at Renmin University.
The double-track system emphasizes the many
differences between the two groups. The pensions
of enterprise employees only increase marginally
with inflation, but former employees of government
organizations and institutions have pensions that
rise in tandem with the salaries in their old
workplace, leading to a widening gap between the
"When you look at pension provision in other
countries, almost all of those systems are
designed to promote fairness. Obviously, China's
current pension system is not," said Zheng. "We
can't say the government didn't make an effort,
but the fact is those attempts failed to have any
obvious effect. Why do the reforms so seldom work?
Many people from government organizations and
institutions don't want to give up their high
pensions. That's why graduates are so keen to take
the examination for government service. Besides, a
rational, practical reform plan is not available,"
The pension gap
Miao Liang, 57, a Beijing resident, was made
redundant from his job in a steel foundry 10 years
ago. "To tell the truth, I have never earned 3,000
yuan a month in my life. Now I work on a
construction site as a doorkeeper and the salary
is 1,500 yuan, out of that I have to use 500 yuan
for my pension account," he said.
"When I was in the foundry, I was often voted
employee of the year, but sadly, it went bankrupt.
Even as a doorkeeper, I am still contributing to
society. Why do civil servants receive more than
4,000 yuan a month when they retire, but ordinary
workers only get about 1,000 yuan. I'm in poor
health now and if the retirement age is raised,
maybe I won't even reach pensionable age. It's
just unfair," he said.
"So many problems related to the system have not
been solved yet, so to promote the extension of
the retirement age will not only fail to solve the
real problems, but will also increase public
resentment," said Zhang Zhanxin.
"The reform of China's pension system should be
carried out as soon as possible, but it should be
undertaken on a step-by-step basis, to minimize
any resistance in the future," said Zheng
Gongcheng. He urged that the first step should be
the establishment of a basic pension insurance
system for employees of government organizations
and institutions and said that they need to pay a
certain proportion of the pension insurance
themselves, just as enterprises workers do.
Second, the country needs to gradually reduce the
pensions of workers in government organizations
and institutions to narrow the gap with
enterprises workers. Third, the mechanism whereby
the government workers' pensions increase in
lockstep with salaries needs to be scrapped.
Tang of CASS also called for a fair and uniform
national pension system. "A self-sustaining social
security system should depend on contributions
from new workers and effective investment.
However, on the one hand, there are more
pensioners than contributors in an aging society,
and on the other, it's difficult for pensions
funds to beat inflation through investment when
many countries are facing a financial crisis," he
Every province, municipality and autonomous region
in China has its own system, so the profits and
losses of pensions funds vary because the number
of retirees and contributors changes from region
The pensions pot is also suffering because tens of
millions of workers in State-owned enterprises
were forced to retire in 1998 to reduce staff
numbers and improve efficiency. Those workers
retired at an average age of 47, but were not
obliged to put extra cash into a public fund,
meaning that their pensions are being funded by
today's employees, according to Tsinghua's Yang.
Caring for a country's elderly population is more
a problem of wealth distribution than insurance.
Formulating a balanced distribution system and
implementing the reforms rapidly would be more
effective and be more popular with the general
public than simply imposing a heavier burden such
as extending the retirement age, said Tang.
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