Gradual delayed retirement: scientific adjustment of the legal retirement age

category:Finance
 Gradual delayed retirement: scientific adjustment of the legal retirement age


The current situation of legal retirement age in China and foreign countries

In 1935, the social security act of the United States was promulgated, which defined the legal retirement age of men and women as 65 years old for the first time. In 1983, the United States revised the social security act, which for the first time decided to raise the legal retirement age of men and women from 65 to 67 years old, and it was divided into two steps: the first step was to extend the legal retirement age of men and women from 65 to 66 from 2003 to 2009; the second step was to extend the legal retirement age of men and women from 66 to 67 from 2021 to 2027.

In 1951, the regulations of the peoples Republic of China on labor insurance was promulgated, which defined the legal retirement age of Chinese male and female workers for the first time as: female special workers 45 years old, male special workers 55 years old, female workers 50 years old, female cadres 55 years old, men 60 years old. This retirement age standard has been used up to now.

With the increasing of life expectancy in the world, the dependency ratio of the elderly is increasing rapidly. The increasing burden of elderly dependency ratio is the main reason for the continuous extension of the statutory retirement age in the world. According to OECD standards, the average elderly dependency ratio of OECD countries is estimated to be 31% in 2020, 20% in 1980 and 58% in 2060. In fact, extending the retirement age has become a major trend in the world, with three common characteristics: first, the retirement age of men and women is moving towards unification; second, the retirement age of men and women is being extended to over 65 years old; third, the flexible retirement system with reward and punishment mechanism has become more popular.

According to the OECD pension statistics report in 2019, the average normal retirement age for men and women in 36 OECD countries is 64. At present, many OECD countries have legislated to extend the legal retirement age for men and women to 67 years old and above.

Japan is the first country in the world to practice the concept of lifelong employment system. It is precisely because countries in the world continue to extend the statutory retirement age that the concept of lifelong employment system may become a social reality. In addition, the United States, France and other developed countries have also promulgated laws and regulations prohibiting employers from forcing employees to retire, so as to ensure the implementation of lifelong employment system.

Flexible retirement system with reward and punishment mechanism

The legal retirement age is a legal concept of basic endowment insurance. Generally speaking, the insured must meet two basic conditions at the same time when they go through the normal retirement procedures and receive the full pension: one is to reach the legal normal retirement age; the other is to meet the normal requirements of the payment period. This is not only the minimum threshold standard for receiving full pension, but also an incentive mechanism of more payment, more long-term payment.

In the United States, if the insured wants to retire normally and receive full pension, they must meet two basic conditions at the same time: first, the insured must reach the current legal retirement age of 66 years; second, the insureds payment period should reach at least 35 years. Otherwise, you cant get a full pension.

However, the United States implements flexible retirement system, which allows early retirement or delayed retirement, and sets punishment standard for early retirement and reward standard for delayed retirement.

However, according to the basic pension insurance pension calculation formula in the United States, if the insured retires early after only 10 years of contribution, if the individuals indexed annual income is summed up for ten years, divided by 35 years, and then divided by 12 months, the lifetime indexed monthly average income calculated in this way will be severely diluted, and the final pension payment will be pitiful.

Analysis on the expected effect of two kinds of deferment schemes in China

At present, there are mainly two kinds of proposals in the domestic retirement extension scheme: one is the majority group, which advocates that the statutory retirement age for men and women should be extended simultaneously, and finally the retirement age for men and women should be gradually unified. The other is the minority, who advocate that the retirement age for men and women should be unified to 60 years of age first, and then gradually increase the retirement age for men and women. I am the main advocate of the latter.

Obviously, the former proposition is more difficult to operate and more resistant in reality. As the majority group, the more typical deferred retirement scheme is the relevant recommendations in the green paper on population and labor at the end of 2015. It will be implemented from 2018. The retirement age of women will be delayed by one year every three years, and the retirement age of men will be delayed by one year every six years, until it reaches 65 at the same time in 2045.

In this scheme, there are at least two difficult problems that are difficult to solve: first, there are too many retirement age classes for women, and the gap is too big. For example, female special workers retire at 45 years old and female farmers retire at 60 years old, with a difference of 15 years between the two. Obviously, if we delay the retirement age of men and women simultaneously, it means that the unfairness of the system will continue to be maintained. Secondly, if the retirement age of men and women is extended at the same time, when the retirement age of men is extended from 60 to 61, should women farmers also be extended from 60 to 61? Obviously, this is unfair to female farmers; or the retirement age of female farmers remains unchanged for the time being, waiting for urban female workers to first extend the retirement age from 55 to 60, then the female farmers and the female workers will continue to extend the retirement age. If this is done, it is not in line with the policy arrangement of extending the retirement age of men and women at the same time.

Therefore, the policy proposition of giving priority to the simultaneous extension of the retirement age for men and women, and finally to a unified retirement age for men and women, is not only complicated and difficult to operate, but also has greater policy resistance.

On the contrary, the policy of giving priority to unifying the retirement age of men and women is easy to operate, easy to understand and accept, and has little resistance to reform. Moreover, it will produce more important social and policy effects.

Secondly, if we give priority to unifying the retirement age of men and women to 60 years old, we can save at least tens of millions of female labor force, which can not only offset the reduction of the total labor supply caused by the aging population, but also objectively extend the time of social security payment, which is conducive to the intergenerational balance of social security burden and reduce the pressure of social security payment for future generations.

Finally, if we give priority to unifying the retirement age of men and women to 60 years old, we can at least transport about 50 million domestic workers and professional nursing for community services and pension services in China, and at the same time, it will help to alleviate the huge gap in the demand for elderly service talents in China.

Priority should be given to unifying the retirement age of men and women

At present, the retirement age gap between men and women in Chinas urban areas is obviously too large. Female special workers are 45 years old, female workers are 50 years old, and men are 60 years old. Generally speaking, urban female workers retire too early. However, the average life span of women in China is 4.4 years longer than that of men. Therefore, the urgent task of Chinas retirement age reform is to first unify the retirement age of men and women to 60 years old, and then further extend it. This is not only conducive to the unity and fairness of the system, but also the reform path most in line with Chinas national conditions.

In fact, the unified retirement age for men and women has a good institutional basis. First of all, China has unified the legal retirement age (the age of receiving endowment insurance) for urban and rural residents to 60 years old for men and women. This step of reform is very smooth. In 2009, China established a new rural endowment insurance system, formally unifying the legal retirement age of male and female farmers to 60; in 2011, China established the basic pension insurance system for urban residents, formally unifying the retirement age of men and women to 60 years old.

By the end of 2019, there were 532.66 million urban and rural residents participating in the basic endowment insurance, including 160.32 million people actually receiving treatment. That is to say, at present, the statutory retirement age of 533 million urban and rural residents (regardless of men and women) has been unified as 60 years old, which is the largest insured group of basic endowment insurance in China.

Secondly, the legal retirement age for all female staff and workers in government organs and institutions and for female cadres in enterprises can be unified to 60 years old, mainly involving all female staff and workers in government organs and institutions, about 30 million people, and women cadres in enterprises.

As a matter of fact, as early as February 16, 2015, the Organization Department of the CPC Central Committee and the Ministry of human resources and Social Security jointly issued the notice on the retirement age of female cadres at the county level and those with senior professional titles in government and public institutions. The notice stipulates that since March 1, 2015, female cadres at the head and deputy county levels and corresponding post levels in party and government organs and peoples organizations will be in the Female cadres at the level of chief and Deputy departments and female professional and technical personnel with senior titles who hold party affairs and administrative work shall retire at the age of 60. However, they can also voluntarily retire at the age of 55.

Therefore, it is suggested that China should give priority to unifying the retirement age of men and women to 60 years old, and set up a flexible retirement system with reward and punishment mechanism at the same time. It is the most feasible and least resistance to the reform of the retirement system.