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Text｜"Caijing" reporter Sun Yingni, Zou Biying, Wang Lina, intern Liu Yuqing

Editor: Wang Yanchun

The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision") points out that the reform of gradually delaying the statutory retirement age should be promoted in a stable and orderly manner in accordance with the principles of voluntariness and flexibility.

This is the first time that the central government has clearly listed "voluntary and flexible" as the basic principles for delaying the statutory retirement age. After the release of the "Decision", it once again aroused widespread public attention and heated discussions on delaying retirement.

China has entered a moderately aging society. In January 2024, data released by the National Bureau of Statistics showed that by the end of 2023, people aged 60 and above accounted for 21.1% of the national population. According to the explanation of relevant personnel from the National Bureau of Statistics, if the proportion of the population aged 60 and above is between 20% and 30%, it is a moderately aging stage.

At present, the statutory retirement age for employees in China is still 60 for men, 55 for female cadres, and 50 for female workers. This is the standard in the relevant regulations issued by the State Council in 1978. However, China's elderly population is large and aging rapidly. Previously, the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China identified actively responding to population aging as a national strategy. By the end of 2023, the elderly population aged 60 and above in China will account for 21.1% of the total population, and the elderly population aged 65 and above will account for 15.4% of the total population.

Experts interviewed by Caixin said that delaying retirement is inevitable given the increasingly serious aging population, the reduction of the demographic dividend, the increase in years of education, and the growth rate of pension financial income lagging behind the growth rate of payments.

Economist Ren Zeping's team predicts that China will enter a super-aged society with a proportion of over 20% around 2030, and about 37.4% in 2060. How to cope with the rapid change in population structure? How to solve the problem of "getting old before getting rich"? The "Decision" first proposed the principle of "voluntary and flexible", which foreshadows the change in retirement mode.

Fang Lianquan, Secretary-General of the World Social Security Research Center of the Chinese Academy of Social Sciences, told Caixin that the decision was to propose a steady and orderly advancement of the gradual delay in the statutory retirement age reform. The specific plan is yet to be further clarified by subsequent policies, but compared with previous statements, the delayed retirement reform emphasizes the principles of voluntariness and flexibility, "not a mandatory, one-size-fits-all implementation."

What is "voluntary" and "flexible" is the key to promoting the gradual delay of retirement in a safe and orderly manner.Fang Lianquan believes that delaying the statutory retirement age is not only a change in employment policy, but also related to pension collection. In terms of specific program design, it is recommended to include the annual extension time, when to receive full pension, the minimum number of years to receive pension, and corresponding incentive mechanisms, so that workers can voluntarily and flexibly choose to delay their retirement age according to their own circumstances. Fang Lianquan further explained that establishing an incentive mechanism related to delayed retirement and pension collection and formulating corresponding incentive measures will help to steadily and orderly promote the delayed retirement reform and encourage the elderly population with working ability to continue to work.

The final plan for delaying retirement has not yet been released. How long will it be delayed? How to reflect the principle of flexibility and voluntariness? Will the retirement age for men and women be the same? Many issues have attracted much attention.Many experts interviewed by Caixin said that the basic principles of reform are to make small adjustments, carry out gradual reforms, avoid "one size fits all" measures, and implement them gradually with smaller scales.

Zheng Bingwen, director of the World Social Security Research Center of the Chinese Academy of Social Sciences, said in an interview with Caixin that the so-called "small-step adjustment" means delaying a few months a year, and extending it by one year in total for several years.For example, if the retirement age of male employees is raised from 60 to 65, it is impossible to simply announce: In 20XX, the retirement age of male employees will be 65, "no country will carry out such a shock reform."

Zheng Bingwen suggested that there could be three options for "small-step adjustments": delaying by three months a year; extending by four months a year; and a very mild option: extending by only two months a year.

Among the three options, Zheng Bingwen prefers a delay of three months a year, which would not only raise the retirement age within a certain period of time, but also reduce the resistance to reform.

Zheng Bingwen believes that this gradual reform will have little impact on personal retirement arrangements, family life and grandparents' care, and the impact is not obvious. For people in their 50s and 60s, the feeling of delayed retirement is diluted. For people in their 30s and 40s, there is still a long time before actual retirement, so the impact on psychological expectations is not significant.

Song Jian, deputy director of the Population and Development Research Center of Renmin University of China, told Caijing that lowering the retirement age and increasing the pension replacement rate have been the rights and interests of workers in various countries for a long time. After the 1980s, as the population aged, governments around the world tried to delay the retirement age to cope with the financial pressure of pensions. From international experience, the statutory retirement age has experienced a "spoon-shaped" curve change from the initial 70 years old to a lower level and then to a continuous increase.

Song Jian introduced that the legal retirement age in developed countries is generally 65 or 67, but the actual retirement age varies from person to person. The calculation methods of pensions in different countries are different, and pensions are often lower than the income of working people. Some countries adopt a flexible retirement system, providing different pension ratios for retirees of different ages.

Caijing learned that in 2022, the Swiss people voted by a narrow margin to raise the retirement age for women to 65. In 2007, the German parliament passed a plan to delay retirement by one month each year starting in 2021, and by two months each year starting in 2024, until the retirement age is 67 in 2029.

Data shows that among people aged 65-69 in Japan, as many as 50.3% are still working, becoming the "main force" in the employment of the elderly. Over the past few years, the Japanese government has actively encouraged "older people to re-employment". The "Older People's Employment Security Law" revised in April 2021 raised the encouraged retirement age to 70.

According to data from the Organization for Economic Cooperation and Development (OECD), the employment rate of South Koreans aged 65 and over in 2021 was 34.9%, higher than Japan (25.1%), which is also facing the problem of an aging population. According to the latest statistics from South Korea, in the first half of this year, the employment rate of South Koreans aged 70 and over exceeded 30% for the first time, setting a record high. Most people aged 70 and over who plan to continue working prefer to work part-time for 4-5 hours a day due to their health conditions. More than half (55.8%) said they plan to postpone retirement to make up for insufficient pension income.

Song Jian said that China proposed the idea of ​​delaying the statutory retirement age in 2013, and has been carefully discussing it in recent years. The "voluntary" principle is based on the demand side, and workers can make active choices based on their own needs and actual conditions, which reflects the respect for individual rights and interests and the humanistic care of policy making.

Yang Yansui, a professor at the Hospital Management Institute of Tsinghua University, said that the principle of "flexibility" is conducive to leaving room for policy discussion. Li Jia, deputy director of the Institute of Aging Society of Pangu Think Tank, told Caixin that "flexibility" is also reflected in the implementation process. Retirement policies are not static and should be adjusted dynamically according to employment conditions, aging levels and social and economic conditions.

Flexible retirement, how to get pension?

Li Jia suggested that the implementation of China's new retirement policy should not be "one size fits all" and should fully consider the actual situation and needs of different social groups. So, how should the principles of voluntariness and flexibility be reflected in the delayed retirement plan?

According to analysis by many experts, voluntariness and flexibility are mainly reflected in giving individuals the right to decide on retirement time, allowing workers to have a certain degree of flexibility in retirement age, retirement method and retirement income.Zheng Bingwen explained that an early or delayed retirement age is set before and after the statutory retirement age to form a range. If an early retirement age is chosen, employees will receive less pension, while if a delayed retirement age is chosen, they can receive more pension.

Lin Bao, a researcher at the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, proposed a flexible retirement plan, which is to gradually increase the statutory retirement age of men and women to 65 in about 20 years. In actual operation, the original retirement age is used as the minimum retirement age, and the statutory retirement age plus 5 years is used as the maximum retirement age, eventually forming a flexible retirement range of 60-70 years for men and 55-70 years for women.

The voluntary choice of retirement time may also be linked to a corresponding proportion of the pension "reward and punishment mechanism".

Caijing learned that the United States plans to extend the statutory retirement age to 67 in 2027. The earliest early retirement age and the maximum rewardable delayed retirement age are 62 and 70 respectively. If you retire at the age of 62, you must deduct about 30% of the normal retirement age payment standard; if you choose not to go through the retirement procedures or receive a pension, but continue to work and pay social security, then after you reach the age of 70, your monthly pension can be increased by up to 30%.

Lin Bao said that the existing pension system does not provide enough incentives for long-term contributions, and some people are unwilling to continue paying contributions after reaching the minimum age limit. Through flexible design, the payment period can be more closely linked to pension benefits, guiding and motivating people to take the initiative to delay retirement, thus smoothly achieving the goal of retirement age reform.

Sun Jie, vice president of the School of Insurance at the University of International Business and Economics, believes that appropriately extending the working years of highly skilled talents and senior intellectuals can provide talent support, and the overall health of Chinese intellectuals allows for appropriate delays in retirement. For front-line and grassroots workers, especially manual workers in the manufacturing industry, and workers who have been engaged in high-risk, high-pollution and labor-intensive industries for a long time, the current retirement age can be maintained.

In addition, whether men and women retire at the same age is also a focus of attention. Caijing learned that it has basically become a consensus in the academic community that women should delay retirement at a slightly faster rate and narrow the gap in retirement age between men and women.

Sun Jie believes that the previous policy of different retirement ages for men and women was determined by the living and working environment of female employees at that time and the characteristics of their jobs. For example, textile workers at that time needed to stand for a long time, and the labor was more physically demanding for women. With the continuous application of technology in production and manufacturing, the loss of labor force is not as serious as in the past.

Zheng Bingwen also said that the same age for men and women is a global trend. Other countries can implement it, and China is no exception. In addition, delaying retirement is a small step forward, and the impact on women in the future will not be great.

A study published in 2020 by Zhang Chuanchuan, a researcher at the School of Economics of Zhejiang University, and others pointed out that the health of the elderly population should be taken into consideration when determining the delayed retirement plan. The study calculated that the additional working capacity of Chinese men aged 60 to 74 is 2.78 years, and the additional working capacity of women aged 50 to 64 is 2.18 years. Based on this calculation, the health of China's elderly labor force can generally support 2-5 years of additional working years.

Regardless of which specific plan is adopted, Li Jia said that the implementation of delayed retirement must be based on more thorough investigation and research, grasp the specific needs of different groups of people, fully listen to the opinions of the public, and consider the interests of all parties. Only scientific decisions based on data can make the measures targeted and gain the understanding and support of the general public.

Every time there is a heated discussion about the policy of delaying retirement, it is accompanied by some concerns and worries among the people.

Song Jian introduced that in some countries, delayed retirement policy implementation has encountered obstacles. Concerns include: First, intergenerational conflicts in the job market. Will delayed retirement reduce employment opportunities for young people? Second, family human resource allocation. Will the elderly face conflicts between continuing to work and helping their children raise grandchildren? It may exacerbate the fertility anxiety of the younger generation. Third, economic pressure. Can the retirement system cover the entire population? What is the impact of delayed retirement on individual income? Will it aggravate income differentiation among people? And so on.

It is worth noting that in recent years, the topics of "35-year-old crisis" and unemployment among middle-aged people have attracted much attention.How to ensure employment for older workers and how to deal with the "old unemployment window" problem after delaying retirement remain major challenges. Many experts said that the delayed retirement reform involves the vital interests of more than 500 million workers, and it is necessary to make overall plans, make a series of supporting policies, consider potential impacts and response strategies, respond to public concerns, and pay attention to social feedback.

Regarding the issue of squeezing out young people's jobs, Zheng Bingwen said that in the short term, delaying retirement will have an impact on the job market and will increase the youth unemployment rate. This will be more obvious in the early stages of reform. But in the medium and long term, the contradiction will gradually be diluted by time. The two most extreme typical cases are that the statutory retirement age in the United States is currently 65 years old, which will be raised to 67 years old in 2027, and the actual retirement age will be even higher, but the unemployment rate in the United States remains at around 5%.

Zheng Bingwen pointed out that in the United States, if an individual does not request retirement, even if he or she reaches the statutory retirement age, the employer cannot force him or her to retire. Greek men retire at 60 and women retire at 58, and the unemployment rate is twice that of the United States, which proves that delaying retirement will not necessarily increase the youth unemployment rate. "The employment rate is fundamentally related to the overall economic level of the society."

Lu Zhe, chief macroeconomist of Founder Securities, once used Japan as a sample for analysis. Japan gradually delayed retirement from 2004 to 2013, and its young elderly people were more likely to be employed in knowledge-intensive service industries such as education, medical care, finance, and information technology, which would indeed have a certain impact on young people's employment in these industries.

Lu Zhe pointed out that the intergenerational gap in education level between young people and younger elderly people in China is much larger than that in Japan. In the early stage of delayed retirement, the employment of young people in these industries may be less affected; after the intergenerational education gap narrows, the impact will increase. For static analysis only, from 2010 to 2020, among the eight industries where young people aged 16 to 29 have concentrated influx, the industries with a relatively high proportion of younger elderly people aged 50 to 64 are construction, public administration, real estate, social security and social organizations, education, leasing and business services, and health social workers. The replacement rate of younger elderly people may be higher.

However, Mo Rong, president of the Chinese Academy of Labor and Social Security Sciences, warned that China's working-age population has been declining for many years, and the labor force participation rate has continued to decline. In the future, China's population aging process will continue to intensify, and if the current retirement age policy remains unchanged, there may even be a shortage of labor supply in the future.

"Young people don't need to worry too much." Chi Fulin, president of the China (Hainan) Institute for Reform and Development, said that the reform of delaying retirement will be delayed by a few months each year or by one month every few months. The additional labor force due to delayed retirement each year will not be too much, and may even be offset by the annual reduction in the labor force.

So, how to ensure the employment of older workers? Mo Rong suggested that the lifelong vocational skills training system should be implemented and the job skills training for older workers should be strengthened. Song Jian suggested that corresponding employment opportunities and jobs should be provided for people of different ages; necessary job adjustments should be made according to the physical condition of the elderly and job requirements. In response to the problem of "elderly unemployment window period", vocational training and re-education should be strengthened to enhance the employment competitiveness of middle-aged and elderly people.

In addition, Li Jia suggested that labor laws and regulations should be improved, age discrimination should be strictly prohibited, and the employment rights and interests of older workers should be protected. At the same time, various measures and preferential policies should be adopted to encourage companies to employ older workers.

China has a strong culture of grandparents raising children, and some people worry that delaying retirement will reduce the time for grandparents to raise children, which will inhibit fertility. At the same time, there are also views that delaying retirement increases the labor force participation rate of the elderly, increases income in old age, and reduces the burden of elderly care for young people, which may reduce or even avoid the crowding out of elderly care for family fertility.

In this regard, Song Jian still suggested improving the family protection mechanism, such as developing a universal childcare service system, alleviating the problem of insufficient human resources within the family, and alleviating the worries of family childcare.

Chi Fulin believes that the delay in retirement is gradual and the pace is generally slow. Those who retired in the early stage of the reform will only delay their retirement by a few months, which will have little impact on family care and childcare activities. For younger workers, there is still some time before retirement, so they have more time to plan their family life.

The policy of delaying retirement requires a comprehensive reform of the social security and pension security systems. Wang Zhongmin, former vice chairman of the National Council for Social Security Fund, said that China's current social security system has inequalities in pension issues, such as urban-rural differences and occupational differences, which need to be fully considered when formulating the policy of delaying retirement.

China's pension system can be roughly divided into three pillars: statutory basic pension insurance, enterprise annuities and occupational annuities, and personal pension reserves. The current situation of China's pension development is that it relies too much on the first pillar and the second and third pillars are insufficient. Experts suggest that the reform of social security integration should be accelerated to gradually narrow the gap between urban and rural areas and between those within and outside the system. For example, the pension benefits of the elderly in urban and rural areas and those of different occupations should be coordinated so that everyone can have a pension in old age.

In addition, how can we ensure the sustainability of the public pension system when young people pay to support the elderly?

Song Jian believes that delaying the statutory retirement age is, to a certain extent, starting from the demand side, reducing the pressure on the pension system by extending working hours and shortening the time to receive pensions. But the root cause also lies in improving supply capacity, such as achieving national coordination, realizing adjustments across the country, and solving the problem of uneven regional pension pressure.

At the same time, we should strengthen the investment management of pension insurance funds to realize their value preservation and appreciation; optimize the system design and expand the coverage of insurance participants, etc. By improving the multi-level pension insurance system and adapting to the needs of retirement age reform.

Song Jian also emphasized that there is no nationwide unified "appropriate" level of pension benefits. The workers' years of service, nature of their occupations and work contributions should be fully considered to set a reasonable pension level and retirement replacement rate.

Delayed retirement means that the post-90s generation will receive pensions later. Li Jia said that this requires us to plan our personal finances in advance and allocate finances to the whole life in a reasonable, scientific and effective manner. At the same time, we can effectively disperse risks through reasonable asset allocation. In this process, we need to improve our personal financial knowledge and investment skills so that we can distinguish investment products and make more wise investment decisions.

Song Jian said that individuals should first make good education and career plans. With the popularization of higher education, people's education years are constantly increasing, and the age of starting their careers is getting later and later. The labor market has also undergone tremendous changes in the information age, and flexible employment and other forms of employment are constantly emerging. Education level, employment mode, nature of the unit, years of work, salary level, etc. may affect the pension payment method and treatment, and individuals should understand this.

"What individuals need to consider is how to spend our cyclical lives." Li Jia said that every individual needs to realize that we are facing the era of longevity and the advent of C-type life (cycles). "Life is no longer the birth, growth, learning, work, and retirement of the past. In the future, we can continue to learn, improve, and start new jobs in any life cycle. This will be the norm in life, and it should not be a problem."

Li Jia pointed out that although many people have not yet entered old age, they are already unable to adapt to new lifestyles such as electronic payment and mobile taxis, and are stuck in the digital divide and unable to enjoy the convenience brought by new technologies. It must be seen that with the increase in life expectancy, we are facing a brand new "third life" - an old age period of more than 20 years. Only by continuous learning and keeping pace with the times can we have a better life in old age.

"In addition, you need to be prepared financially, physically and mentally." Song Jian said that the era of longevity we are experiencing is unprecedented, and everyone must be responsible for their own life.

This article was published in Caijing magazine on August 19, 2024