Banyuetan (半月谈) of the CCP Propaganda Department recently published an article saying that between now and the next ten years, China will see the largest wave of retirements in history, which the newspaper calls a “retirement tide” with an average of 20 million people retiring each year.
According to the article, the population born in the 1960s will enter retirement age, pension pressure will increase, and the working population will also decrease significantly, so how to deal with this situation has become a hot topic in recent times.
The media outlet National Business Daily points out that the retirement wave’s first impact is the continuous and significant decline in the working-age population.
Peng Xizhe(彭希哲), Dean of the Institute on Aging at Fudan University, said the retirement wave would witness more than 20 million retirees yearly; however, the annual potential new labor supply is only 17 to 18 million. Each year, the working-age population will decrease by 3 to 5 million people; for example, Beijing, Jiangxi, and other places will reduce the working-age population by 3 to 5 million people this year.
In addition, the number of retirees in many places has continuously reached record highs, with more than 7 million in Guangdong and 9.15 million in Zhejiang.
Peng Xizhe also pointed out that the number of retirees is increasing, and the number of pensioners is also increasing, but the number of retirees is more than the number of new workers, and the funding of pensioners will continue to decrease.
Current pension insurance in mainland China relies on three pillars. The first pillar is basic pension insurance, including pension insurance for urban workers and urban and rural residents; the second is corporate and occupational pensions, and the third is the individual pension. The first pillar accounts for the largest share, and the third pillar has just begun its development.
Yao Yudong (姚余栋), former Director of the Financial Research Institute of the People’s Bank of China, said that to relieve pressure on first-pillar pensions, the third-pillar replacement rate should be at least 10%.
Xu Zewei (许泽玮), chairman of the 91 Technology Group and deputy member of the National People’s Congress of Beijing, analyzed that with the introduction of the pension system, society will also undergo significant changes. In the next few years, the number of civil service exams could explode, providing more opportunities for young people who wish to apply for public services.
He said that with the increase of retirees, the demand for aged care facilities would also explode, and the aged care service industry would create more business and employment opportunities.