What Impact on Employers and Foreign Staff? How to Prepare?
Last year, China has reformed its retirement system. The long-expected "gradual postponement" of the legal retirement age is now a reality.
So what do companies, foreign employees, and HR teams need to know?
Previous Legal Retirement Ages
Under previous national regulations:
• Men retired at age 60.
• Women in management roles retired at 55.
• Non-managerial female employees retired at 50.
These rules hadn't changed in decades. But with China's population aging rapidly, authorities recently moved to delay retirement age across the board.
What's Changed and Why
Last year, the Chinese government formalised the implementation of a progressive retirement postponement policy effective 2025, and spread over until 2039, avoiding sudden shifts by:
• Gradually raising the retirement age by a few months each year,
• Gradually increasing the contribution period,
• Encouraging a flexible retirement mechanism, allowing plus or minus 3 years early or delayed retirement, based on personal and company needs.
The goal is to keep the workforce more active, reduce pension system pressure, and align with longer life expectancy trends.
To make the whole system work, the authorities will overall improve the pension plan insurance mechanism and employees are encouraged to make more contributions and on a long-term, as well as use postponement for more pension.
What will be the Retirement Age in the End?
Impact on Employers and Foreign Staff
If not already done, companies should start reviewing internal policies now. The changes made may affect:
• Contract terms, especially those tied to retirement age.
• Succession planning and workforce restructuring when the time comes.
• Foreign employees: while many expats leave before retirement, those staying long-term will be affected.
Multinational companies should also be aware of potential misalignment between home-country and host-country retirement systems, especially in long-term assignments and prevent any consequent issues beforehand.
HR Tips: How to Prepare
1. Monitor local developments if any.
2. Double-check employees' retirement eligibility to prevent any administrative missteps, such as unintentional delayed retirement.
3. Update employment contracts: avoid fixed retirement dates, refer instead to applicable rules.
4. Assign the correct classification for female employees (managerial vs non-managerial), as it affects their official retirement timeline.
5. Communicate with employee by sharing any updates to prevent confusion.
6. Seek legal advice, especially for handling transitions.
Final thought
The direction is clear. Both companies and employees should anticipate adjustments and plan early. Staying compliant, and competitive, means preparing today for the workforce of tomorrow.
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