China Releases Rules to Implement A Flexible Retirement System

Following the “Decisions on Gradually Raising the Statutory Retirement Ages” (全国人民代表大会常务委员会关于实施渐进式延迟法定退休年龄的决定) and the Measures of the State Council on Gradually Raising the Statutory Retirement Ages” (国务院关于渐进式延迟法定退休年龄的办法), both issued in September 2024 (collectively referred to as “Framework Legislation”) (read our earlier briefing here), the Chinese government further released the “Interim Measures for Implementing a Flexible Retirement System” (实施弹性退休制度暂行办法, the “Interim Measures”) on December 31, 2024. The Interim Measures took effect on January 1, 2025.

The Interim Measures provide more detailed implementing rules to the Framework Legislation. Here are some key highlights of the Interim Measures and our observations:

I. Early Retirement 

Under the Interim Measures, employees may voluntarily choose to retire earlier than their raised statutory retirement age, provided that they meet the following requirements.

1. They have met the raised minimum pension contribution years corresponding to their actual retirement age;
2. The advanced retirement period must not exceed 3 years;
3. Their actual retirement age must not be lower than the original statutory retirement ages (i.e. 60 for males, 55 for females in managerial or technical positions, and 50 for females in ordinary positions); and
4. They must notify their employer in writing at least three months prior to the selected retirement date.

To illustrate, a male employee born on September 2, 1972 has a raised statutory retirement age of 62 in accordance with Appendix 1 of the Framework Legislation. He may choose to retire between ages 60 and 62, provided he meets the corresponding raised minimum pension contribution years. For instance, if he intends to retire at 61 (i.e., on September 2, 2033), he can do so if he has contributed basic pension insurance for 17 years (which is the raised minimum pension contribution years for 2033 according to Appendix 4 of the Framework Legislation) on an accumulated basis, and has notified the employer of such intention in writing no later than June 2, 2033.

II. Deferred Retirement

The Interim Measures also permit deferred retirement – an employee’s retirement can be deferred for up to three additional years, provided that they meet the following requirements:

1. the employee has reached their raised statutory retirement age;
2. the employee has fulfilled the minimum pension contribution years corresponding to their raised statutory retirement age;
3. both the employer and employee agree to the deferred retirement arrangement (including the exact retirement date) in writing one month before the raised statutory retirement age; and
4. once the deferred retirement date is established, it cannot be further extended (however, it can be shortened subject to mutual agreement).

To illustrate, a female employee in a non-managerial/technical position, born on November 10, 1980, has a raised statutory retirement age of 53, with a corresponding minimum pension contribution years of 17 years, in accordance with the Appendixes 1 and 4 of the Framework Legislation. Upon reaching 53 on November 10, 2033, and having been subject to basic pension insurance for 17 years on an accumulated basis, her retirement can be deferred to a date between ages 53 and 56, subject to agreement with her employer. The employer and the employee should negotiate and finalise the details of deferred retirement through a relevant agreement no later than October 10, 2033. 

III. Nature of Relationship during Deferred Retirement Period

The Interim Measures explicitly state that the employment relationship between the employer and employee shall be extended during the deferred retirement period. The employer shall pay mandatory social insurance contributions for the employee in full and on time, while also protecting the employee’s legal rights and interests in accordance with the PRC Employment Contract Law.  

This is inconsistent with the existing flexible deferred pension collection schemes in certain localities (e.g. Beijing and Shanghai). Under those schemes, the relationship between the parties is a service relationship rather than an employment relationship. It is anticipated that those existing flexible deferred pension collection schemes may be adjusted or even cancelled to align with the Interim Measures. 

IV. Next Steps

The Interim Measures clarify various issues and provide useful guidance for the implementation of the flexible retirement system. 

To avoid potential disputes, employers may consider formulating necessary internal rules and preparing standard documents (e.g., notice for early retirement, agreement for deferred retirement) for relevant employees to execute. 

The full Interim Measures (available in Chinese only) can be found here.