Editor's Note: During the 14th Five-Year Plan (2021-25) period, the statutory retirement age will be raised in a phased manner, according to recently released documents. Two scholars share their views with China Daily on why and how the retirement age should be raised.
(MA XUEJING / CHINA DAILY)
Raising retirement age necessary and reasonable
It is understandable that the plan to raise the retirement age has sparked online debates, because the move involves individuals' interests. Actually, China proposed to study the pros and cons of extending the retirement age during the 13th Five-Year Plan (2016-20) period, and delayed retirement has been on many countries' agenda for a long time.
The wider the debate is, the clearer the issues will become. The first misunderstanding is that the government is mulling raising the retirement age to make up the so-called shortfall in pension funds. The fact is, there is no such thing as a nationwide shortfall in the pension funds, because the situation varies from region to region. Some regions generate surplus pension funds while others struggle to collect enough funds to meet their requirements. So we need a unified pension system to ensure all regions have adequate pension funds.
Many countries with pension insurance surplus are drawing up plans for raising the retirement age, which shows that delayed retirement is not necessarily related to balanced distribution of pension funds, which is a problem that requires long-term solutions.
Pension is paid on the basis of the number of years a person has worked－when he or she started working and how long he/she worked.
Nowadays, people start working at a much later age. So the retirement age should be extended in line with the structural changes of individuals' life-cycle, especially working years. For example, most people born in the 1960s started working after graduating from high school. If they retire or have retired at 60, and are expected to live up to 80, they would have worked for about 40 years and would draw pensions for about 20 years.
But many born in the 1980s and 1990s started (or may start) working at 25 or even 30 due to their pursuit of higher education. If such people, too, retire at 60, they would have worked for only 35 or 30 years. And given their longer life expectancy, they will receive pensions for a longer period of time, putting extra pressure on the pension system.
Therefore, delayed retirement can be better understood in terms of life-cycle and working years.
But since delayed retirement concerns people's interests, it must be formulated carefully. First, the retirement age should be raised, once the leadership decides to do so, uniformly across the country. Although rolling out pilot programs before implementing many economic and social reforms made them more effective, the retirement age cannot be raised in different regions in a staggered manner, because that will not be conducive to balanced development in different regions. Also, people should be given some retirement options to choose from.
Second, some people are against raising the retirement age because they feel they may be forced to work for a few "extra years". Learning from other countries' practices, some policies can be adopted to help people accept the delayed retirement plan. For instance, it should be made clear to employees that the longer they contribute to the pension funds, the higher pension they will draw after retirement－and early retirement will result in reduced pension. Such incentive policies can help win over those opposed to extending the retirement age.
Third, many believe raising the retirement age will reduce employment opportunities for young people, as fewer new posts would be created due to people's retirement. But such worries are unnecessary. A job is not created because of a person's retirement, rather job creation depends on a country's economic development and industrial structural adjustment. So the government should carefully monitor the labor market, and pay closer attention to the employment problems faced by young people and to older employees' safety.
And fourth, it is important to balance the interests of different groups. China's current retirement system distinguishes between men and women, and the employees of State-owned enterprises and privately-owned companies have different opinions on delayed retirement. The new retirement policy needs to be fair to all groups.
The debate on delayed retirement shows reform of social policies has transformed from the inclusive to the structural model, which will face more challenges and need more political wisdom and practical strategies to resolve.
Lu Quan, secretary-general of the China Association of Social Security, and an associate professor at Renmin University of China
Regulate contributions to build consensus
During the 14th Five-Year Plan (2021-25) period, the statutory retirement age will be raised in a phased manner.
Lu Quan, an associate professor at Renmin University of China, stressed that apart from uniformly raising the retirement age across the country, the authorities also need to adopt a flexible and incentive-oriented system based on changes, for example, in the job market to achieve success.
Yet such comments have not swayed the skeptics. Many are worried that given the general health condition of the Chinese people, it will be hard for many to continue working after 60, and some argue that delayed retirement means they will have to continue contributing to the pension funds for some extra years and get fewer years to enjoy the returns (as pension) after retirement.
Although the authorities denied the policy change is aimed at replenishing the pension funds, there is indeed huge pressure on the pension funds, especially because of the rapidly rising aging population.
Whether a consensus can be reached on delayed retirement depends on whether retirement is recognized as a right or a duty for the people. Currently, it's an obligation for employees to retire after reaching the legal retirement age.
Disputes do crop up over compulsory retirement, particularly among workers such as skilled technicians and supervisors. In China, the retirement age for men is 60, while for women it is 55 for "white-collar" workers and 50 for "blue-collar" employees. It has been so since the 1950s.
And despite the central government and local authorities issuing documents raising the retirement age for women cadres and experts to 60, its implementation has varied from place to place, and the courts have dismissed cases of women experts and cadres being forced to retire at 55 by giving precedence to the law over the government documents.
I once offered legal help to some women, who were forced to retire at the mandatory age of 55 or 50, including a pharmacist in Tangshan, Hebei province, 13 teachers in Wenzhou, Zhejiang province, and the director of the nursing department at a nursing home in Daxing district, Beijing. All of them failed the arbitration or lost the lawsuit.
Many women have complained that their right to work had been violated, because despite being managerial-level employees, they were forced to retire at the age of 50, the retirement age for women "blue-collar" workers.
In recent years, cases related to the retirement age have involved people in managerial positions who have to take a backseat five years before retiring. Both men and women whose careers have been cut short before their schedule retirement have suffered this way.
Such obligatory retirement system needs reform. Perhaps the right-standard retirement arrangement, followed by many countries, is more suited to China. For instance, in Italy, from Jan 1, 2019, all categories of workers have to contribute to the pension fund for at least 20 years and yet get pension only after reaching 67 years (applicable till 2026). Italy also has specific regulations on the number of years of contribution to the pension fund for different retirement ages including early retirement and delayed retirement.
In Australia, in July 2017, the age for receiving pension was increased to 65 and 6 months.
The retirement age will continue to increase by six months every two years until July 1, 2023, when it will reach 67.
Australia has also given its citizens the right to choose to work or not to work after reaching the retirement age.
Any mandatory retirement regulation based on age would go against Australian laws such as the Sex Discrimination Act 1984 and Equal Opportunity Act 1995.
In China's case, full pension should be paid to the people who have contributed their share of pension for at least 25 years, with the minimum requirement for getting pension being 20 years of contribution to the pension fund.
And accordingly, after employees, either male or female, contribute to the pension funds for at least 20 years, they should be free to retire in advance or continue to work.
Such a right-standard retirement system takes into account the different demands of the parties, and respects the will of the people.
As for the employees, they should be able to retire after reaching a certain age, because it will create room for young people to be employed and contribute to the pension funds.
In fact, it is an important way of building a public consensus on raising the retirement age.
Liu Minghui, a professor at the School of Law, China Women's University
The views don't necessarily reflect those of China Daily.