China has introduced a five-year plan aimed at addressing the dual challenges of its rapidly aging population and a strained pension system. This plan, following the Third Plenum of the Chinese Communist Party (CCP), proposes a gradual increase in the statutory retirement age for over 500 million workers, with an emphasis on "voluntary participation with appropriate flexibility."

The language used in the plan, according to The Epoch Times, is intentionally vague to mitigate public concern rather than create uncertainty. China is grappling with the combined pressures of an aging population, declining birth rates, and sluggish economic growth, all of which are straining the nation’s social security and pension systems.

Japan-based Nikkei Asia reports that the five-year reform plan includes a commitment to raising the retirement age. The resolution from the Third Plenum of the CCP's 20th Central Committee outlines that China will gradually increase the statutory retirement age, adhering to the principles of voluntary participation and flexibility.

This marks the first time a key policy document has clearly detailed the principles behind this reform, signaling that the long-anticipated changes may soon be implemented.

China's current retirement age is among the lowest globally—60 for men and between 50 and 55 for women, depending on their occupation. In contrast, the retirement age is 62 in the United States and 66 in Germany. Despite unchanged retirement rules since 1951, China’s average life expectancy has risen from 67.9 years in 1981 to 78.2 years in 2021.

Unlike the United States, where retirees often have private pensions or employer-funded retirement plans alongside state social security, urban workers in China mainly depend on state pensions.

The aging population and increasing life expectancy are putting immense pressure on China’s pension system. Between 2012 and 2021, the elderly dependency ratio surged from 12.7% to 20.8%, meaning that by 2021, nearly 21 retirees depended on every 100 workers, up from 13 in 2012.

At the current rate, China’s state pension funds are expected to deplete within a decade, forcing Beijing to urgently reform and fortify its public pension system.

According to MarketWatch, China faces a demographic crisis characterized by one of the lowest fertility rates in the world, with its population both shrinking and aging. The report suggests that China may not "get rich before it gets old."

China’s pension system, once a robust government program, is now under significant strain and has fragmented. While Japan is often cited as an example of such a crisis, China’s situation is more severe, affecting a population ten times larger.

Over the next decade, approximately 300 million people are expected to retire from China’s workforce, adding immense pressure on the shrinking pool of working-age individuals, who are already facing overwork and disillusionment.

The Chinese Academy of Social Sciences, a leading think tank, estimates that the basic pension fund for urban employees could be exhausted by 2035.

Meanwhile, China, the world’s second-most populous country after India, is undergoing an unprecedented demographic shift. The number of people aged 60 and older has nearly tripled from 126 million in 2000 to 297 million in 2023, doubling their share of the population.

Over the next 30 years, China’s working-age population (those aged 15 to 64) is expected to shrink by about 170 million, while the population aged 65 and over is projected to nearly double to 380 million, classifying China as a "severely aging" society, according to the International Monetary Fund (IMF).

Compounding this issue is China’s declining birth rate, with the number of newborns decreasing annually since 2017, leading to a population decline in 2022. Last year, China recorded a historic low of 9.02 million births, as India overtook China as the world’s most populous country.

These challenges are significantly impacting China’s economy and increasing the burden on its social security system.

In 2023, Chinese policymakers proposed, for the first time, raising the retirement age "in progressive steps," though specific details remain unclear.

The urgency of these reforms is highlighted by the forecast that without intervention, China's pension funds may be depleted within a decade, putting the country at risk of a social and economic crisis.