China is looking at ways of making sure there’s enough money in the country’s pension fund to pay all eligible retirees. One under consideration is delaying the retirement age. But some experts say authorities should also consider how to reduce the pension payment gap between private enterprises and government institutions.

58-year-old publishing company sales manager Xue Peihuais two years away from retirement. He says that after he retires, his pension will be 3,000 yuan per month, about a third of his regular salary. But he says he doesn’t want to continue working beyond age sixty, and says he’s not the only one at his firm.

Xue Peihua, Shanghai Resident said, “One of my colleagues has difficulties in walking due to his age. He wants to retire as soon as possible. Some want to leave because of bad interpersonal relationships. And some want to start their own business. I just want to write something or do some travelling.”

Earlier this week, China’s National Council for Social Security Fund admitted the country now has a pension shortage. Men in China usually retire at 60; the council is considering delaying that to 63 in order to narrow the pension gap. Many people suggest China should allow flexible retirement as in the United States, where the normal retirement age for people who want to receive a full government pension is 67. Workers may choose to retire and start collecting a smaller pension as early as 62, but the longer they wait, the more they will get each month for the rest of their lives. In both China and the United States, some highly-paid workers prefer to delay their retirement because they can earn much more than the pension payment. But people who earn less may decide to retire earlier. One expert says it’s difficult for a flexible policy like that to be widely accepted in China.

PROF. Feng Jin, School of Economics, Fudan UNIV. said, "Take the monopolies for example. Late retirement will give them more benefits, which other workers will resent."

In the mid-1990s, China was undergoing economic reforms aimed at helping domestic enterprises compete with foreign companies in China by lowering their business costs. That included allowing non-government enterprises to pay lower pensions to their workers. As a result, their pension return has dropped by 50 percent over the past two decades compared to government institutions.

PROF. Feng Jin said, “It is necessary in China to remove or reduce the gap between private enterprises and government institutions. On the other hand, the retirement-delay plan should be carried out slowly. For example, a person born in 1970 could retire at the age of 60, one born in 1971 could retire at 60 and a half, and one born in 1972 could retire at 61. ”

About five million people retire every year in China. Feng says that while delaying the retirement age by six months can increase the nation’s pension fund by 80 billion yuan each year, it would enlarge the gap between China’s rich and poor.

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