People on their bicycles and e-bikes wait at a traffic light intersection during the morning rush hour in Beijing, Friday, Sept. 13, 2024.

Starting next year, China will raise its retirement age for workers, now among the youngest in the world’s major economies, in a bid to deal with its shrinking population and aging workforce.

The Standing Committee of the National People’s Congress, the country’s legislature, adopted the new policy on Friday after a surprise announcement earlier this week that it was reviewing the measure, state broadcaster CCTV announced.

The policy change will be implemented over 15 years, with the retirement age for men raised to 63 and for women to 55 or 58 depending on their work. The current retirement age is 60 for men and 50 for women in blue-collar jobs and 55 for women in white-collar jobs.

“We have more people entering retirement age, and therefore the pension fund is (facing) great pressure. That’s why I think now is the time to act seriously,” said Xiujian Peng, a senior researcher at Victoria University in Australia who studies China’s population and its ties to the economy.

The previous retirement ages were set in the 1950s, when life expectancy was only around 40 years, Peng said.

The policy will be implemented starting in January, according to the announcement by China’s lawmakers. The change will take effect gradually based on people’s birth dates.

For example, a man born in January 1971 could retire at the age of 61 years and 7 months in August 2032, according to a chart released with the policy. A man born in May 1971 could retire at 61 years and 8 months in January 2033.

The demographic pressure made the move long overdue, experts say. By the end of 2023, China had nearly 300 million people over the age of 60. By 2035, that number is estimated to be 400 million, larger than the population of the United States. The Chinese Academy of Social Sciences had previously estimated that the general pension fund will run out that year.

The pressure on social benefits such as pensions and social security is hardly a China-specific problem. The US is also facing the problem as analysis shows that currently, The Social Security Fund will not be able to pay full benefits to people in 2033.

“This is happening everywhere,” said Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations. “But in China with its large elderly population, the challenge is much greater.”

That’s on top of fewer births, as younger people opt out of having children, citing high costs. In 2022, China’s National Bureau of Statistics reported that for the first time, the country had 850,000 fewer people at the end of the year than the previous year a turning point from population growth to decline. Year 2023, the population shrank furtherof 2 million people.

What this means is that the burden of funding the pensions of the elderly will be distributed to a smaller group of younger workers, as the pension payments are largely funded by deductions from people who are currently working.

Researchers measure that pressure by looking at a number called the dependency ratio, which counts the number of people over 65 compared to the number of workers under 65. That number was 21.8% in 2022, according to government statistics, meaning about five workers would support a pensioner. The proportion is expected to rise, meaning that fewer workers will bear the burden of a pensioner.

The necessary course correction will cause short-term pain, experts say, at a time of already high youth unemployment and a soft economy.

A 52-year-old Beijing resident, who gave his surname as Lu and will now retire at age 61 instead of 60, welcomed the change. “I see this as a good thing, because our society is getting older, and in developed countries the retirement age is higher,” he said.

Li Bin, 35, who works in the event planning industry, said she was a little sad.

“That’s three years less playing time. I had originally planned to travel around after retirement, she said. But she said it was better than expected because the retirement age was only raised three years for women in white-collar jobs.

Some of the comments on social media when the policy review was announced earlier this week reflected concern.

But of the 13,000 comments on the Xinhua news post announcing the news, only a few dozen were visible, suggesting many others had been censored.

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Wu reported from Bangkok. Video producer Caroline Chen in Beijing contributed to this report.

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