º¬Ðß²ÝÉçÇø

The Standing Committee of the National People¡¯s Congress announced its Decision on Implementing the Gradual Extension of the Statutory Retirement Age on 13 September 2024. Simultaneously, the State Council issued its Measures on the Gradual Extension of the Statutory Retirement Age detailing how the new retirement policy will be implemented when it takes effect on 1 January 2025.

In light of China¡¯s rapidly aging population, the government has for many years been discussing extending the statutory retirement age, which is low by global standards. The state-run pension system faces an imminent shortfall in funds due to the growing number of elderly enjoying pension benefits, combined with a gradual reduction in the working age population.

Up until now, the central government had been hesitant to implement what many observers say is a necessary reform, perhaps fearing political backlash similar to what recently happened when France raised its retirement age.

Currently, the statutory retirement age for male employees is 60 years; for female employees in ¡°cadre¡± positions (generally interpreted to mean managerial and senior technical job positions) it is 55 years; and for ordinary female workers, it is 50 years.

To receive state pension benefits, employees have generally had to contribute to the state-run social insurance system (including pension fund) for at least 15 years in aggregate. Individuals may work past their statutory retirement age, although generally they would not be considered an ¡°employee¡± protected by law.

Implementation rules

Under the above-mentioned decision taking effect on 1 January 2025, the statutory retirement age will be gradually increased over 15 years until reaching 63 years old for men, 58 for women in managerial and technical roles, and 55 for women in ordinary worker roles.

Key details of the above-mentioned measures include:

• For all men and for women in managerial or technical roles, the retirement age will increase by one month for every four months that pass, starting from 1 January, until the statutory retirement age reaches 63 and 58 years, respectively. For women in ordinary worker roles, the retirement age will increase by one month for every two months that pass, starting from 1 January, until the statutory retirement age reaches 55 years.
• Helpfully, the measures also include appendices that specifically detail what the new statutory retirement age will be for an employee based on when they were born, so employers will not have to manually calculate this based on the implementing principle. For example, a male employee born in January 1970 will have a new retirement age of 61 years and 4 months, so they will reach retirement age in May 2031.
• The other major change is that individuals will need to contribute to the basic pension insurance fund for a longer minimum period before being eligible to receive pension benefits. Currently, they must generally contribute for 15 years before being eligible. Starting from 1 January 2030, the minimum period for pension contributions will increase by six months every year, until the minimum period reaches 20 years. An appendix chart in the measures also provides specific details on how this will work (e.g. in 2032, an employee will have to have contributed to the state-run pension fund for at least 16 years and 6 months before becoming eligible for pension benefits).
• Another provision in the decision is that if employees reach the minimum period of pension contribution before reaching the new statutory retirement age, they can apply to retire early, but only up to a maximum of three years early, and in no event earlier than the original statutory retirement age (namely, 60 for men, 55 for women in senior managerial and technical roles, and 50 for ordinary female workers). The provision also states that if an employee wishes to extend their retirement age, they can do so by up to three years with mutual agreement of the employer.
• Finally, even if an employer hires someone who has already passed the statutory retirement age, the employer should still ensure the individual¡¯s basic interests regarding remuneration, rest and leave, work safety and hygiene, work injury, etc.

Key takeaways

As more people reach retirement age, the number of queries and disputes arising from retirement issues has of late significantly increased, particularly since the law lacks clarity in certain key respects.

For example, disputes over whether a female employee¡¯s retirement age should be 50 or 55 have become quite common, as the law does not provide a specific or detailed definition of ¡°cadre¡± and ¡°worker¡±. This will be key for determining when they lose employment law protection, particularly against termination.

There are also disputes over when they can be eligible for pension benefits, since this will determine when their employment automatically ends and they lose employment law protection.

Companies should also be aware that different cities may continue to have their own local policies or court practices on how to deal with various retirement-related issues within the national framework, as national law is still silent or unclear on certain key questions.

Finally, companies should be prepared to handle special requests from employees who are near retirement age; either requests to retire early, or requests to extend their retirement age by up to three years (and continue receiving employment law protections and benefits). This means internally aligning how to treat such requests to avoid decisions being seen as arbitrary or unfair by their workforce.