China gradually raises retirement age – what companies and employees need to know

published on 16 October 2024 | reading time approx. 2 Minuten

On 13 September 2024, the Standing Committee of the National People's Congress decided to gradually raise the retirement age in China. This measure will affect both men and women and will take place simultaneously. Over the next 15 years, the retirement age will be raised from 50 to 55 for women in physically demanding jobs, from 55 to 58 for women in office jobs and from 60 to 63 for men in general. The increase will take place in small steps over the period. From 2030, the minimum contribution period for pension insurance will also be gradually increased from 15 to 20 years. Employees may voluntarily retire a maximum of three years before reaching the minimum contribution period, but no earlier than the current retirement age.

People‘s Governments at all levels are encouraged to take an active interest in the ageing population and to help older workers find jobs, protect their employment rights or start their own businesses.

The resolution also provides for a flexible approach to raising the retirement age. The current rigid system, which mandates retirement at retirement age, will be relaxed, also in stages. It will be possible for employees to continue working for up to three years after the statutory retirement age (up to five years for women in physically demanding jobs), provided they are healthy and willing to do so. Employers will not be able to refuse, i.e. they will not be able to force employees to choose their retirement age against their will.

The Chinese government has provided an online calculator (in Chinese only) to calculate the retirement age and the length of possible continued employment after retirement age. This calculator provides the following examples of retirement ages and the maximum length of possible continued employment beyond this age:

The retirement age will be gradually increased up to the new, adjusted retirement age. The adjustments are made in small steps. It is therefore advisable to use the online calculator mentioned above to determine the exact individual retirement age.

The debate about raising the retirement age in China has been going on for several years and is highly controversial. On the one hand, China has one of the lowest retirement ages in the world. With an ageing population and a steadily declining birth rate, financing the pension system is becoming increasingly difficult and challenging. On the other hand, the increase in the retirement age coincides with high youth unemployment, and there are concerns that the increase in the retirement age will further worsen the employment prospects of young people. In addition, retired people play an important social role in families, particularly in caring for children. New regulations now allow children of migrant workers to attend school and receive health insurance benefits at their parents' place of work, so that migrant workers can, at least in theory, take their children to their place of work.

For companies, these changes mean that they need to rethink their workforce planning. Employment contracts usually stipulate that employees will leave the company when they reach retirement age. However, once the resolution comes into force, employees will be able to stay with the company for longer. It is not clear whether compensation is payable for additional work beyond retirement age. On the other hand, well-trained employees who are difficult for the company to replace because of their experience will be able to stay longer in the company and thus be employed longer for the benefit of the company.