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Extending the retirement age may be something the government has to do in the near future to alleviate the increasingly heavy pressure on pension funds. The Ministry of Human Resources and Social Security confirmed on Tuesday that it is considering putting forward such a proposal to the central authorities.
The recent national census revealed that the number of residents above the age of 60 had reached 185 million at the end of last year, accounting for 13.7 percent of the country's total population. By 2015, this figure will be 221 million, 16 percent of the total population.
It is unrealistic for the central coffers to always subsidize the pension funds. The annual pension report for 2011 showed that the revenue for 14 provinces and municipalities' public accounts and accounts for the retired fell short for paying the pensions and the deficit was almost 70 billion yuan ($11 billion).
The current retirement policy was introduced in the 1970s when the average life expectancy was 70. The retirement age is 60 for male employees, 55 for women officials and 50 for female workers. If the retirement age is raised, say, by five years, the pensions of millions might be saved annually.
However, extending the retirement age will reduce the opportunities for young job seekers. The number of university graduates was 6.5 million in 2011 and will be around 6.8 million this summer. If more than 12 percent of them cannot land a job, as estimated by the Chinese Academy of Social Sciences, more than 800,000 will remain unemployed upon graduation, joining those unemployed graduates from previous years.
If the extension of the retirement age makes it even harder for them to land a job, the effect of the growing unemployment rate on social stability will offset what the new policy achieves in reduced spending. This is what policymakers must take into consideration when amending the rules concerning retirement.
Revising the retirement policy is a complicated matter. Early this year, the ministry talked about a flexible retirement system, which would allow those who wanted to work until they are 65 or even older.
Undoubtedly the retirement age needs to be adjusted, but wisdom is needed to balance the needs of different social groups when it comes to the making of new retirement policies.