HPA-China Commentary: The Below article highlights the opportunity for dietary supplement brands that focus on senior citizen health and wellness. China’s “Silver” population is growing exponentially, which will be a burden for China if many of these older citizens are not well. Fitness, nutrition and food supplements will be key to ensure a healthy senior population.
On September 13, 2024, the Standing Committee of the 14th National People’s Congress passed the Decision on the Implementation of Gradual Delayed Retirement Age (the “Decision”).
According to the Decision, starting from January 1, 2025, China will simultaneously begin delaying the statutory retirement age for both male and female employees. Over a period of 15 years, the statutory retirement age for male employees will gradually be extended from the current 60 years to 63 years. For female employees, the retirement age will increase from 50 to 55 for those in blue-collar jobs, and from 55 to 58 for those in white-collar jobs, reflecting the distinction between different categories of employment.
Additionally, this meeting approved the Measures for the Gradual Delayed Retirement Age (the “Measures”) by the State Council, which stipulates corresponding changes to pension insurance, elderly career support, as well as voluntary retirement schemes.
Why China needs to delay its statutory retirement age
China faces several compelling reasons to delay its statutory retirement age, driven by demographic shifts, economic considerations, and international best practices.
The average life expectancy in China has significantly increased from around 40 years in the 1940s to 78.6 years today. This extended lifespan means that individuals remain healthy and capable of working well beyond the current retirement age.
Meanwhile, the average education duration for new entrants into the labor force has risen from eight years in the late 1970s to 14 years today. Consequently, people are entering the workforce later, and without adjusting the retirement age, this could lead to under-utilization of human capital.
More importantly, China must proactively address its aging population. As of 2023, the population aged 60 and above reached 297 million, representing 21.1 percent of the total population, while those aged 65 and above exceeded 217 million, or 15.4 percent. By 2035, the elderly population is projected to surpass 400 million, accounting for over 30 percent of the population, marking a transition to a severely aged society. Concurrently, the working-age population has been declining since 2012, with an annual decrease of over 3 million. Delaying retirement can mitigate this decline, sustaining economic and social vitality.
On the other hand, extending the retirement age will result in longer contributions to the pension system, enhancing the accumulation in individual accounts. This will bolster the pension system’s financial health, reducing the pressure on payouts. Additionally, the duration of pension disbursements will be shortened, leading to lower overall pension expenditures.
Global trends indicate that delaying retirement increases the participation rate of older workers, fosters the growth of the “silver economy,” and enhances the income and spending power of senior workers. This, in turn, stimulates consumer demand and job creation. (Source: China-Briefing.com)