[News Terms] China's Measures for a Super-Aged Society: 'Flexible Retirement System'... What About Korea?

China will implement a 'flexible retirement system' starting this year, allowing workers to work up to three years beyond the statutory retirement age.

On the 2nd, the state-run Xinhua News Agency reported that the Ministry of Human Resources and Social Security, the Ministry of Finance, and the Central Organization Department of the Communist Party of China announced the "Provisional Implementation Measures for the Flexible Retirement System" the day before. The "flexible retirement system" is a supplementary measure to the retirement age extension decided by the Chinese government last year. The Standing Committee of the National People's Congress, China's legislature, decided in September last year to gradually extend the statutory retirement age, which serves as the monthly basic pension receipt standard, over the next 15 years. The retirement age for female production workers and office staff will increase from the current 55 to 58, for production workers from 50 to 55, and for men from 60 to 63. The retirement age will be extended gradually by 2 to 4 months per year. In fact, this has little impact on workers currently approaching retirement.

The flexible retirement system opens the door for workers who are about to retire to continue working beyond the current retirement age. Previously, Chinese workers had to retire uniformly upon reaching the retirement age. According to the new guidelines, if the company and the worker agree, the worker can postpone retirement for up to three years. However, the state grants eligibility for flexible retirement only after the minimum pension contribution period is met.

The Chinese government cited the example of a male worker born in September 1972. This worker's retirement age is 62. If the worker has met the minimum pension contribution, he can flexibly choose to 'retire early' between the ages of 60 and 62. If the worker does not opt for flexible early retirement, he can retire at the new statutory retirement age of 62. With company agreement, retirement can be further postponed flexibly for up to three more years, between ages 62 and 65.

As of the end of 2022, China had 296.97 million people aged 60 or older, accounting for 21.1% of the total population. China classifies a population aged 60 or older of 10-20% as mildly aged, 20-30% as moderately aged, and over 30% as severely aged. The State Council of China projected in a 2022 report that by 2035, the population aged 60 or older will exceed 420 million, surpassing the 30% threshold, and that the elderly population ratio will peak by 2050. Since last year, China has begun institutional reforms to actively respond to aging.

International standards classify societies as aging if the population aged 65 or older exceeds 7%, aged society if over 14%, and super-aged society if over 20%. South Korea entered a super-aged society on December 23 last year, when the proportion of people aged 65 or older exceeded 20% of the total population. This occurred seven years after becoming an aged society with 14% elderly in 2017, marking the fastest pace in the world. It was also one year earlier than the government's forecast. According to the Statistics Korea's population projection released in February, the proportion of people aged 65 or older was 17.4% in 2022, is expected to reach 19.2% this year, and exceed 20% next year (20.3%). If this trend continues, South Korea is projected to become the country with the largest elderly population in the world within 20 years. The government plans to establish a Population Strategy Planning Department at the vice-premier level in the first half of next year to oversee population structure issues. However, this plan has become uncertain as the government organization law pending in the Standing Committee has been deprioritized. All discussions have stalled due to political instability, including the presidential impeachment.