Gradual delayed retirement: scientific adjustment of the legal retirement age

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


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.

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.

In the United States, there are two threshold conditions for early retirement of basic pension insurance participants: first, the insured must be over 62 years old; second, the insured has obtained at least 40 points (equivalent to 10 years of payment in theory) by paying social security tax. If you retire immediately after you reach 62, your pension will be reduced by 30% on top of your 66 year old normal pension.

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.

In terms of system design, the United States encourages voluntary postponement of retirement. That is to say, when the insured reaches the legal normal retirement age, they do not go through the retirement procedures and receive no pension, but continue to work, then the employer can not force the employee to retire, and there are rewards for delaying the retirement.

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

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.

First of all, if we give priority to unifying the retirement age of men and women to 60 years old, we can not only eliminate the institutional discrimination against the retirement age of women in different occupations, but also eliminate the gender discrimination in the retirement age of men and women. This is the objective requirement of system unification and system fairness.

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

As we all know, Chinas current basic endowment insurance system is divided into two types: one is the basic endowment insurance system for employees; the other is the basic endowment insurance system for urban and rural residents. The former covers the employees of enterprises, government organs, institutions and urban flexible employees; the latter covers urban and rural residents who are over 16 years old, are not in school (or part-time school), and do not participate in the basic endowment insurance for employees. The two systems complement each other and jointly implement the full coverage of Chinas basic endowment insurance system.

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.

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. This article is from Wang Xiaowu, editor in charge of economic report in the 21st century_ NF

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.