According to the decision, starting from January 1, 2025, China will use 15 years to gradually delay the legal retirement age for male employees from 60 to 63 years old, and for female employees from 50 and 55 years old to 55 and 58 years old, respectively. Finally, the retirement delay reform, which has been brewing for more than a decade, has begun. Within half an hour of the "decision" being announced, related terms about delaying retirement surged to the top of the search trends, with many people expressing their opinions, including concerns about future career prospects and old-age care. It proposed to "study and formulate a gradual delay in retirement age policy." Since then, the retirement delay reform has entered an accelerated period. However, looking at the global context, delaying retirement is not unique to China. As the global population ages, delaying retirement has become a widely adopted strategy by governments around the world.

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Why is the whole world promoting delayed retirement? The "delayed retirement" policy generally includes two aspects: first, delaying the legal retirement age for receiving pensions, aimed at easing the pressure of pension gaps and ensuring the sustainability of the pension insurance system; second, delaying the legal retirement age, allowing workers to decide autonomously within a certain range when to stop working, extending the working time of some elderly people, but also respecting the autonomous wishes of special groups. As the degree of aging continues to deepen, many countries have introduced delayed retirement policies to cope with the labor shortage and the expansion of pension gaps brought about by aging. In October 2022, the British government stated that it is considering raising the age for receiving state pensions to 68 as soon as 2035; in January 2023, the French government announced a reform plan for the retirement system, planning to gradually raise the legal retirement age from the current 62 to 64 by 2030. According to data from the Organisation for Economic Co-operation and Development (OECD), Denmark's retirement age has been raised to 67 in 2022; Germany's current retirement age is 65 and will be raised to 67 by 2030... The global trend of delayed retirement policies stems from several common big-picture factors, including population aging, labor shortages, and the sustainability of pension systems.

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Most countries' implementation of social security policies began after World War II. Taking the UK as an example, in 1942, the British Committee on Social Insurance and Allied Services released a report titled "Social Insurance and Allied Services" (also known as the "Beveridge Report"), proposing the establishment of a comprehensive social security system in the UK, covering unemployment, old age, sickness, and other fields. Many countries have followed the "Beveridge Report" concept and established their social security systems after the war.

The post-war "baby boom" led to a continuous population increase, forming the demographic basis for the "pay-as-you-go" social security system in the following decades. However, with the disappearance of the global population dividend, declining fertility rates, and extended average life expectancy, the population structure of many countries has changed significantly. According to United Nations data, the global population aged 65 and above was about 727 million in 2020, accounting for 9.3% of the total population, and is expected to increase to 1.6 billion, or 16% of the total population, by 2050. In this context, countries have to face the reality of an increasing number of elderly people, and the pressure on the balance of pension payments increases accordingly.

In addition to the intensification of aging, there is also the issue of labor shortages. Many countries are now facing a shortage of young workers, especially in economically developed areas, where this phenomenon is more pronounced. Implementing delayed retirement policies, and encouraging the elderly to remain in the labor market can alleviate labor shortages and also slow down the pressure of pension payments.

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China's Choice Amid the Wave of Delayed RetirementAlthough many countries have precedents for delayed retirement, the background of China's implementation of delayed retirement policies has its uniqueness. Like many countries around the world, population aging is a major issue China is facing today. Data from the Ministry of Civil Affairs show that by the end of 2023, the number of people aged 60 and above in China exceeded 296 million, accounting for 21.1%; the number of people aged 65 and above is about 217 million, accounting for 15.4%, and China has entered a moderately aged society. According to predictions, around 2035, the number of people aged 60 and above will exceed 400 million, accounting for more than 30%. At the same time, China has entered an era of longevity. He Dan, director of the China Population and Development Research Center, introduced that according to predictions, before 2030, the average life expectancy in China is likely to exceed 80 years old.

However, China's current legal retirement age is 50 for female workers, 55 for female cadres, and 60 for male workers - this policy has been in place since 1951, and according to the National Bureau of Statistics report, the average life expectancy in China was only 57 years old in 1957.

On the other hand, China's labor supply continues to be insufficient and is on a downward trend. According to the prediction of the Chinese Academy of Social Sciences, by 2050, the working-age population in China aged 15 to 59 will decrease to 710 million, a reduction of about 230 million compared to 2010, and after 2030, China's labor supply will be severely insufficient.

Faced with the harsh reality of increasing life expectancy and decreasing labor force, the risk of pension insufficiency is a core issue. The cumulative surplus of pensions is expected to reach its peak by 2027 and will be exhausted by 2035.

Feng Jin, a professor at the School of Economics at Fudan University, said that the main purpose of China's implementation of delayed retirement is not the decline in China's labor supply but the problem with pensions.

China's pension system is composed of three pillars. The first pillar is the government-led basic pension insurance fund, the second pillar is the enterprise annuity and occupational annuity initiated by enterprises and institutions, and the third pillar is the personal savings pension insurance and commercial pension insurance led by individuals. Among them, the first pillar accounts for 2/3 of the total scale of China's pension.

The pension composition of developed countries is also composed of three pillars of government, enterprises, and individuals, but the proportions are very different in China. Taking the United States as an example, the total scale of pensions in the United States exceeded 40 trillion US dollars in 2021, about 1.7 times its GDP. Among them, the government-led basic pension only accounts for 6.7%, and the combination of enterprise and individual commercial pensions accounts for 93.3%.

China's pension insurance system started relatively late. The basic pension insurance for urban workers was established in the 1990s, and the basic pension insurance system for urban and rural residents has only been fully covered for more than a decade. Under the current "pay-as-you-go" system, the first pillar is dominant, the second pillar has a narrow coverage and unbalanced development, and the third pillar has just been established, and the burden of old-age care is becoming increasingly heavy.

Delaying retirement can partially improve the problem of pension imbalance. As early as 2001, a report released by the research unit of the former Ministry of Labor and Social Security pointed out that for every year China's retirement age is extended, it can increase the pension pool by 4 billion yuan and reduce expenditures by 16 billion yuan, which is equivalent to reducing a gap of 20 billion yuan for the pension pool.

This time, the decision to delay retirement has taken a gradual approach, extending the retirement age year by year or month by month, to reduce the impact on society and individuals, and the entire process will take 15 years to transition. This is similar to the operations of most foreign countries. For example, Germany passed a bill in 2007 to gradually delay the retirement age from 65 in 2012 to 67 in 2029, and it took 17 years from policy announcement, start, and completion; the United States delayed the retirement age from 65 to 67 in 22 years; France delayed the retirement age from 60 to 64 in 20 years; Japan delayed the retirement age from 60 to 65 in 13 years.

In addition, China has also emphasized adhering to the "voluntary, flexible" principle, that is, as long as employees meet the minimum payment period for pensions, they can choose between flexible early retirement and delayed retirement. The early period should not exceed 3 years, and the retirement age should not be lower than the original legal retirement age; the flexible delay should also not exceed 3 years.

From an international perspective, many countries will also adopt a flexible retirement age range when implementing delayed retirement, forming a window period. In addition, some countries will also establish reward and penalty mechanisms. For example, in the United States, in addition to special occupations, employees can choose early retirement, normal retirement, and delayed retirement. Among them, "normal retirement" refers to retiring at the age of "full pension receipt," the lower limit of "early retirement" is set at 62 years old, and the upper limit of "delayed retirement" is 70 years old. At the same time, the pension receipt standards for the above three retirement situations are different: on average, retiring one year early will reduce the pension by 5% to 6.7%, and delaying one year can increase it by 8%. However, the current implementation policy of China's delayed retirement has not yet involved reward and penalty mechanisms.

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Employee's Choices Amid the Wave of Delayed Retirement

Many people feel panicked about delayed retirement, and in fact, they are worried about various social and economic issues. The problem of pension payment difficulties behind delayed retirement has made many company people worry about their lives after retirement. The extension of working life, combined with the current employment situation, has also added a lot of uncertainty to the career life of company people.

Zhou Yihao left McKinsey in 2023 and chose to follow his preferences to become a corporate trainer and executive coach. He is currently working with several Fortune 500 companies to carry out human resources training courses. Born in 1990, he has gone through several rounds in the workplace. Faced with a high-pressure environment and the situation of employees becoming "more and more instrumental," he lost his motivation for "climbing the ladder" in the workplace. When talking about the impact of "delayed retirement" on himself, Zhou Yihao, who is now a "self-employed" entrepreneur, said that he cares more about his ability to continue making money and financial investments.

"Delayed retirement means that the threshold for not working and receiving money has been raised, and it may continue to be raised. I have always believed that the pension will be lower than my income expectations, so I am more concerned about the solution, that is, the second curve of my career, exploring the ability to continue making money." Zhou Yihao said.

Chen Si, who is 36 years old, does not dare to take such a risk. After leaving his last company for two years, he found a middle-level position in an internet company this year. During the job search process, he deeply felt that the opportunities released in the talent market are becoming fewer and fewer. So even if he has successfully "gone ashore" now, a sense of crisis is always around him. The company's business continues to iterate rapidly, and within a month of entering the company, the scope of his responsibility has been much smaller than when he was recruited, "I have 20 years to go, and there are 10 years until retirement, let alone 10 years, where I will be next month, I don't know." Outside of work, Chen Si and his friends established an online operation company for catering stores, trying to find other possibilities for themselves.

The worries of company people on the internet and other fields about life "after 35" actually also reflect deeper structural employment issues. Nie Riming, a researcher at the Shanghai Institute of Finance and Law, introduced that the "experience-salary" curve in developing countries is flatter than that in developed countries, which means that the return on experience for workers in developing countries is lower. China's labor market is relatively flat and lacks depth, unable to accommodate more experienced labor, which also limits China's potential to transform towards lean production and high-end technology. "China's labor market is very broad, but many positions do not require so much experience precipitation, and there is an obvious substitution relationship between young people and the elderly." Nie Riming said. In response to public concerns that delayed retirement will cause a "crowding out effect" on young people's employment, Nie Riming believes that this situation may occur more in high-tech, low-physical effort professional and technical positions, such as university professors, primary and secondary school teachers, doctors, and other professions.

However, since the labor market is not "supply and demand," after delaying retirement, the employment of most elderly people may not be guaranteed.

In June 2021, Sun Li, who was 50 years old, officially retired. Half a year after retiring, she increasingly felt disconnected from society, so she began to learn to fill in resumes on recruitment software and started re-employment. In fact, in economically underdeveloped small cities, in addition to retired re-employment and entering the system as temporary workers through personal connections, it is not easy for middle-aged and elderly people over 50 to find a job that can pay salaries on time and is guaranteed. If considering the technical threshold of specific professions and the work intensity that middle-aged and elderly people can withstand, Sun Li found that the available jobs are only left with cleaning, housekeeping, nursing, security, and other positions.

The delayed retirement policy is not only about the sustainability of pensions but also involves the talent structure of the entire society, employment opportunities, and individual quality of life. While promoting delayed retirement, it is also necessary for relevant departments to issue more targeted measures to ensure a series of livelihood issues brought about by delayed retirement, such as employment.