A Milestone Reform: China Releases New Regulations on Raising the Statutory Retirement Ages

On September 13, 2024, the Chinese government released 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, “Decisions”), endorsing new legislation titled “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, “Measures”). Both the Decisions and the Measures will take effect on January 1, 2025. This marks the first adjustment of the statutory retirement ages since the 1950s and the culmination of a reform that has been on the Chinese government’s agenda for over a decade. 

Here are some key highlights of the Measures and our observations:

Gradually Raising the Statutory Retirement Ages

The Measures adopt a gradual transitional approach to raise the statutory retirement ages over a 15-year period, from January 1, 2025 to December 31, 2039 (“Transition Period”):

• for males: The current statutory retirement age of 60 will increase by 1 month for every 4 months, reaching 63.
• for females in managerial or technical positions: The current statutory retirement age of 55 will increase by 1 month for every 4 months, reaching 58
• for females in ordinary positions: The current statutory retirement age of 50 will increase by 1 month for every 2 months, reaching 55

For example, male employees born between January and April 1965 will have a raised statutory retirement age of 60 years and 1 month. Similarly, female employees in ordinary positions born between March and April 1975 will have a raised statutory retirement age of 50 years and 2 months.

Details regarding birth months and corresponding raised retirement ages are outlined in the appendixes of the Measures.

Gradually Raising Minimum Years for Pension Insurance Contributions

To receive pension entitlements from the government, individuals must meet two conditions: reaching the statutory retirement age and fulfilling the minimum years for pension insurance contributions (“Minimum Pension Contribution Years”).

Under the Measures, the Minimum Pension Contribution Years will increase from 15 years to 20 years. Similar to the approach for raising the statutory retirement age, this change will also be implemented gradually – Starting January 1, 2030, the current 15-year Minimum Pension Contribution Years will increase by 6 months each calendar year (e.g., it will be 15 years and 6 months in 2030, 16 years in 2031, and so on), until it reaches 20 years in 2039.

Early or Deferred Retirement in a Voluntary and Flexible Manner

The Measures provide a flexible mechanism for employees to choose between early or deferred retirement, ensuring that their retirement plans are not materially worse off compared to the current law.

Early retirement

Employees may voluntarily choose to retire earlier than their raised statutory retirement age, provided that they meet the following conditions:

• they have fulfilled the Minimum Pension Contribution Years
• the advanced retirement period must not exceed 3 years; and
• their actual retirement age must not be lower than the current statutory retirement ages (60 for males, 55 for females in managerial or technical positions, and 50 for females in ordinary positions)

For example, a male employee with a statutory retirement age raised to 62 has the option to retire at any time between the ages of 60 and 62. Similarly, a female employee in ordinary positions, with a raised statutory retirement age of 54, can choose to retire at any time between the ages of 51 and 54. Employers are required to accept these retirement requests without rejection.

Moreover, this flexibility for early retirement will remain in place even after the Transition Period concludes.

Deferred retirement

The Measures also allow for deferred retirement. After reaching the raised statutory retirement age, and subject to mutual agreement between employer and employee, an employee’s retirement can be deferred for up to 3 additional years.

For example, a male employee with a statutory retirement age raised to 62 can retire at any time between the ages of 62 and 65. However, approval for deferred retirement is at the employer’s discretion.

The Measures explicitly state that employers must not illegally force or implicitly coerce employees into selecting their retirement age against their will.

Further implementing rules are expected to be released soon to clarify various issues, including but not limited to:

• retirement formalities for early or deferred retirement
• whether the relationship between employer and employee during the deferred retirement period constitutes an employment relationship
• how existing schemes for deferred pension benefits in certain localities (e.g., Beijing and Shanghai) will integrate with the new deferred retirement mechanism under the Measures

Basic Rights for Elderly Workers

For the first time, Article 6 of the Measures states that employers hiring workers beyond the statutory retirement age (“Elderly Workers”) must ensure their basic rights related to labor remuneration, rest and leave, occupational safety and health, and work-related injury insurance, among other aspects.

However, the Measures do not provide a clear definition of Elderly Workers, leaving it uncertain whether this category includes employees who have reached an agreement with their employer for deferred retirement, as mentioned in Section III above.

Additionally, it remains unclear whether Article 6 aims to offer basic entitlements similar to those of employees or if it intends to provide full protection under PRC employment law for Elderly Workers.

Next Steps

Employers should be aware of the raised statutory retirement ages and the transitional arrangement when dealing with the relevant employees in their workforces. Employers should also closely monitor the implementing rules to be published by the government. Once the Measures take effect, to mitigate potential risks related to employment termination, employers should proactively communicate with employees approaching the current statutory retirement age and assist them in completing the relevant early or deferred retirement procedures in a timely manner.

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