China’s workers must labour for longer

For the first time in more than 60 years, China has decided to raise its statutory retirement age. In this article, Jeanette Yu of CMS China Legal analyses the likely impact this will have on employers and what companies need to bear in mind when adjusting their human resource policies.

China’s society is ageing. Over the next few decades, the large number of employees retiring from the workforce will begin to cause a labour shortage. Seeking to reduce the severity of the problem, the Chinese Government decided to reform the statutory retirement age. The reform marks the first time in more than 60 years that the retirement age has been changed.

On 13^th September 2024, the Standing Committee of the National People’s Congress approved the Measures on the Implementation of the Gradual Postponement of the Statutory Retirement Age issued by the State Council.[1] From 1^st January 2025, China will—over a 15-year period—progressively raise the statutory retirement age of employees and take 10 years from 2030 to progressively raise the minimum number of years of pension contributions that employees need to accumulate to receive pension benefits. In addition, employees will have some flexibility on when they retire. On 31^st December 2024, the Ministry of Human Resources and Social Security, together with two other departments, released the Interim Measures for the Implementation of the Flexible Retirement System, providing more detailed rules on implementing the new retirement policies.[2] The details are as follows:

1.The statutory retirement age of employees will be raised progressively.

According to the new retirement policies, starting from 1^st January 2025 and until the end of 2039, the statutory retirement age of male employees whose original statutory retirement age was 60 and female employees in managerial or technical positions whose original statutory retirement age was 55, will be raised by one month every four months [JS4] [CMS5] to 63 and 58 respectively. The statutory retirement age of female employees in blue-collar positions whose original statutory retirement age was 50 shall rise by one month every two months and be progressively raised to 55.

From 1^st January 2030, the minimum number of years employees need to contribute to the public pension fund to become eligible to receive benefits will be gradually increased—rising six months per year until the end of 2039—from 15 to 20 years. The exact new statutory retirement ages as well as the minimum number of contribution years employees need to contribute to the pension fund can be checked in the comparison tables published by the State Council.[3]

2.Notwithstanding the changes to the statutory retirement age, employees are still entitled to choose to retire up to three years before reaching their new statutory retirement age, if the below conditions are fulfilled:

• The employee must have reached the original statutory retirement age, i.e. 60 for male employees, 50 for female employees in blue-collar positions or 55 for female employees in managerial/technical positions. The employee must also have contributed to the pension fund for the minimum number of years required by law.

• The employee deciding to retire earlier must notify their employer in writing about the expected retirement date at least three months in advance. However, an employer’s permission is not needed in the case of early retirement.

3. An employee that has reached the new statutory retirement age may choose to further delay their retirement for a period of up to three years, providing the following conditions are met:

• To delay retirement, the employee must reach an agreement with the employer on the delayed period one month before reaching the new statutory retirement age. Once the delayed retirement period of an employee is decided, it shall not be further extended. However, the employee may still retire at any time with the consent of their employer during the delayed retirement period.

• During the delayed retirement period, the employee will retain an employment relationship with the employer and the employer shall continue to pay social insurance for the employee.  

4. When an employee reaches the statutory retirement age or decides to retire, the employer shall promptly handle the retirement procedures for the employee.

In China, retirement and receipt of pension benefits are subject to the approval of the competent social insurance authority. Employers have an obligation to promptly apply for pension benefits for their employees from the competent authority. Applications need to be made by the month when the employee reaches the statutory retirement age or decides to retire. Upon approval from the competent social insurance authority, the employee will start to receive pension benefits from the month following their retirement date.

Upon reaching the statutory retirement age, if an employee has not yet fulfilled the minimum contribution years to the pension fund, he or she may make a lump-sum contribution to the pension fund to reach the minimum number of contribution years. 

When implementing the new retirement policies, companies may wish to pay attention to the following:

• The new policies apply to employees in all industries but only to those who reach statutory retirement age after 1^st January 2025. However, for employees engaged in certain high-risk/special occupations specified by the government, statutory retirement ages will not be delayed, i.e., a male employee can still retire at 55, and a female employee can retire at 45 or 50.

• The new statutory retirement ages will not be decided based on a uniform standard.  An employee is entitled to decide when to retire, either when reaching the new statutory retirement age, or to retire earlier at his/her discretion, or upon agreement with the employer to retire even after reaching the new statutory retirement age. Therefore, managing the retirement of employees will become more complicated.

• Under the new retirement policies, the statutory retirement ages of female employees in blue-collar positions or managerial/technical positions are still different, i.e. employees in blue-collar positions will reach the statutory retirement age earlier than those in management/technical positions. Since no clear legal definition has been provided to identify the nature of the work position of female employees,  disputes may occur when determining the statutory retirement age of female employees at different work positions in the company.

• When employees choose to retire early or delay their retirement, under the new policies it must be an entirely voluntary decision. When discussing retirement matters with employees, companies must avoid forcing or implicitly forcing employees to make decisions regarding retirement.  

In conclusion, the new retirement policies will affect employers’ daily human resources management and present challenges. Companies may wish, in consideration of their business and employee needs, to formulate new strategies and policies to handle retirement issues. For example, human resource departments may design new internal retirement policies and procedures—to ensure compliance with the revised retirement rules—which can be followed. To mitigate the risk of disputes when deciding the retirement ages of female employees at different work positions, companies may set up their own work position categories according to the law to clarify the nature of work positions in advance.

Jeanette Yu is partner and head of Employment and Pensions Practice Group at CMS Legal China. She is based at their Shanghai office and has more than 20 years’ experience in providing legal advice to international companies on Chinese labour law and compliance management issues. Chambers & Partners and Legal 500 have recognised her as a leading partner in labour and employment among foreign firms in Greater China. Since 2017, Jeanette has also been acting as the national chair/vice chair of the Human Resources Working Group of the European Chamber of Commerce.

[1] Decision of the Standing Committee of the National People’s Congress on the implementation of the gradual postponement of the statutory retirement age, State Council, 13^th September 2024, viewed 24^th March 2025, <https://www.gov.cn/yaowen/liebiao/202409/content_6974294.htm>

[2] Notice of the Ministry of Human Resources and Social Security, the Organisation Department of the Central Committee of the Communist Party of China, and the Ministry of Finance on Printing and Distributing the Interim Measures for the Implementation of the Flexible Retirement System, State Council, 31^st December 2024, viewed 24^th March 2025, <https://www.gov.cn/zhengce/zhengceku/202501/content_6995747.htm>

[3] Decision of the Standing Committee of the National People’s Congress on the implementation of the gradual postponement of the statutory retirement age, State Council, 13^th September 2024, viewed 24^th March 2025, <https://www.gov.cn/yaowen/liebiao/202409/content_6974294.htm>