China has released its plan to raise the statutory retirement age for male and female employees. The increase will start to gradually take effect from January 1, 2025. The ultimate retirement age set by statute will continue to be based on gender and classification as a manager or non-manager. The requisite number of years of contributions to the pension scheme will also gradually increase beginning January 1, 2030.
Numerous reports have suggested that the Chinese government would introduce reforms to provide more funding to the state pension scheme by increasing the duration for workers to make contributions. Increased contributions are needed because of the demographic change to a larger aging population and smaller workforce enrolled in the pension scheme.
The Chinese government introduced one such reform on September 13, 2024. The Standing Committee of the 14th National People’s Congress approved and announced the Measures of the State Council on Gradually Raising the Statutory Retirement Age (Measures). The Measures, which start to take effect on January 1, 2025, make significant changes to the rules regarding the statutory retirement age and the number of years of contributions required for a retired worker to receive the basic pension.
THE STATUTORY RETIREMENT AGE FOR BOTH MALE AND FEMALE EMPLOYEES WILL BE RAISED GRADUALLY STARTING FROM JANUARY 1, 2025
In general, the current statutory retirement age for male employees is 60 years old, and the current retirement age for female employees who are generally classified as managers is 55 years old. The first major change presented by the Measures is that starting from January 1, 2025, the statutory retirement age for these male employees (whose current statutory retirement age is 60 years old) and these female employees (whose current statutory retirement age is 55 years old) will increase by one month for every four-month period after January 1, 2025, so that the retirement ages for this group of males and this group of females eventually reaches 63 years old and 58 years old, respectively.
For female employees whose current statutory retirement age is 50 years old, the statutory retirement age will increase by one month for every two-month period after January 1, 2025, so that the retirement age for this group eventually reaches 55 years old.
For example, under current law, a male employee who was born in March 1965 would generally be expected to retire in March 2025. Under the Measures, however, his statutory retirement age will increase by one month and will be in April 2025 instead. Similarly, for a female employee who was born in May 1975 and is not a manager, under current law, she would expect to retire in May 2025. Under the Measures, her statutory retirement age will increase by two months and will be in July 2025 instead.
Despite the proposed postponement of the statutory retirement age, the Measures still leave some flexibility for employees to choose to retire early on a voluntary basis. Under the Measures, employees who have met the requisite minimum number of years of contributions for the basic pension may “voluntarily choose to retire flexibly and early,” but their retirement may not be more than three years earlier than the new statutory retirement date and may not be earlier than the current statutory retirement age of 50 or 55 years old for female employees and 60 years old for male employees.
The Measures also make it more convenient for an employee to postpone the statutory retirement age voluntarily by up to three years—if both the employer and employee agree to the extended working period. Notably, the Measures stress the importance of the voluntary nature of the employee’s choice regarding when he or she will retire and provide that, in practice, it is unlawful to force an employee in any way to decide when to retire. In other words, if an employee prefers to remain in the workforce as an employee (as opposed to a retiree who is no longer covered by the protections of the employment laws and regulations and is no longer contributing to the social insurance schemes), then the employer may not interfere with the employee’s right and force the employee to retire earlier.
THE MINIMUM NUMBER OF YEARS FOR BASIC PENSION CONTRIBUTIONS WILL INCREASE GRADUALLY FROM JANUARY 1, 2030
The second major change presented by the Measures is that effective January 1, 2030, the minimum contribution period for employees to receive the basic monthly pension will increase by six months each year after January 1, 2030, so that the minimum number of years will have increased from 15 years to 20 years. Employees who have reached the statutory retirement age but have not met the minimum requirement of years of contributions for the basic pension may, in accordance with the applicable regulations, satisfy the required minimum number of years of contribution via extended contributions or one-time payments. This option may not have been previously available in some cities, subject to local rules and practice.
THE MEASURES FURTHER AIM TO REDUCE AGE DISCRIMINATION AND ENCOURAGE THE EMPLOYMENT OF OLDER WORKERS
In addition to the major changes discussed above, the Measures also stress the protection of benefits for workers who have exceeded the statutory retirement age and the Chinese government’s efforts to reduce the instances of discrimination based on age and to encourage the employment of older workers.
RECOMMENDATION TO EMPLOYERS
Employers will need to ensure they follow the Measures and track the applicable statutory retirement age of their employees carefully as well as adjust expectations (and potentially their budgets) if any employees choose not to retire upon hitting the current statutory retirement age. The Measures will have an immediate impact on employees who are about to reach their current statutory retirement age and are expected to retire in 2025.
Employers may easily calculate the new statutory retirement age under the Measures for employees by using the official calculator issued by the labor authorities, which can be accessed by searching “法定退休年龄计算器” on WeChat. Alternatively, employers may consult with the labor bureau via hotline 12333 about the calculation of the statutory retirement age for their employees.
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