On 13 September 2024, the Standing Committee of China’s 14th National People’s Congress had adopted the Decision on Implementing the Gradual Raising of the Statutory Retirement Age (《全国人民代表大会常务委员会关于实施渐进式延迟法定退休年龄的决定》) and approved the Measures of the State Council on Gradually Raising the Statutory Retirement Age (《国务院关于渐进式延迟法定退休年龄的办法》). On 31 December 2024, China’s Ministry of Human Resources & Social Security, Ministry of Finance and the Organization Department of the Central Committee of the Communist Party of China had issued the Provisional Measures for Implementing the Flexible Retirement System (《实施弹性退休制度暂行办法》). All above have come into force since 1 January 2025. Against this background and in conjunction with our practice, we have prepared the following basic Q&A on employment of personnel reaching the statutory retirement age for reference.
What was the regular statutory retirement age and what was the minimum number of years of contributions to enjoy the basic pension benefits before 1 January 2025?
Before 1 January 2025, in general the statutory retirement age for male employees in China was 60 years old. For female employees in managerial, professional and technical positions, the regular statutory retirement age was 55 years old. For female employees in non-managerial, non-professional and non-technical positions, the regular statutory retirement age was 50 years old.
To enjoy the basic pension benefits, in principle an employee had to make basic pension contributions in China for at least 15 years in total.
What are the main changes from 1 January 2025?
Starting from 1 January 2025, in general the statutory retirement age of male employees and female employees, whose original statutory retirement ages were 60 years old and 55 years old, will be gradually deferred by one month every four months until reaching 63 years old and 58 years old, respectively. For female employees whose original statutory retirement age was 50 years old, the statutory retirement age will be gradually deferred by one month every two months until reaching 55 years old. For example, a female employee born in April 1970, whose original statutory retirement age was 55 years old, her new statutory retirement age is 55 years old plus 1 month, so she will reach the statutory retirement age in May 2025. The new statutory retirement age of an employee can be calculated by using the official online calculator.
Starting from 1 January 2030, the minimum contribution period for employees to receive monthly basic pension benefits shall be gradually increased from 15 years to 20 years, with an annual increase of six months. For example, in 2030 an employee shall have contributed to the state-run pension fund for at least 15.5 years before becoming eligible for basic pension benefits; in 2035, for at least 18 years and in 2039, for at least 20 years.
If an employee has reached the statutory retirement age but not yet completed the minimum number of years of contributions, the employee may extend his or her contributions or make a lump-sum contribution to reach the minimum number of years of contributions to enjoy monthly basic pension benefits.
May an employee choose early retirement?
An employee may opt for early retirement if:
- the employee has reached the minimum number of years of contributions for the year corresponding to the early retirement chosen by him or her;
- the maximum period of early retirement chosen by the employee may not exceed three years prior to the statutory retirement age;
- the early retirement age of the employee shall not be lower than the original statutory retirement age of 50 or 55 for female employees and 60 for male employees;
- the employee has notified his or her employer in writing at least three months before the early retirement date of his or her choice.
May the retirement be deferred?
In general, if an employee retires upon reaching the statutory retirement age, his or her employer shall apply for his or her retirement and complete all relevant procedures in a timely manner.
However, the retirement can be deferred if both the employer and the employee conclude a corresponding agreement. The employer and the employee shall specify the deferred retirement period and other relevant matters in writing one month in advance. The maximum deferred period shall not exceed three years from the statutory retirement age. After the deferred retirement period is determined, it cannot be extended again. The employer shall complete all relevant procedures for deferring the retirement with the competent authority without delay.
The labour relationship continues during the period of deferred retirement. The employer and the employee may, by written agreement, terminate the deferred retirement and apply for retirement accordingly.
Will the labour contract end by law without any severance pay once an employee reaches his or her statutory retirement age?
Pursuant to Article 21 of the Regulation on Implementation of the Labour Contract Law, once an employee reaches his or her statutory retirement age, his or her labour contract ends.
However, pursuant to Article 44 No. 2 and Article 46 of the Labour Contract Law and the relevant judicial interpretation of China’s Supreme People’s Court, the labour contract of an employee reaching his or her statutory retirement age will firstly end without severance pay when the employee has started enjoying his or her basic pension benefits.
In practice, local labour arbitral tribunals and people’s courts will usually support the termination of the labour contract without severance pay if:
- the employee has reached his or her statutory retirement age, and
- the employee has started enjoying his or her basic pension benefits.
In such case, if an employer (further or again) engages the retired personnel, the contractual relationship between them will be deemed a service relationship under general civil law but not a labour relationship under employment law. Unless otherwise stipulated in the relevant contract, in principle the retired personnel will not be able to seek protection under employment law provisions.
If the employee has already started enjoying his or her basic pension insurance benefits before reaching his or her statutory retirement age (e.g. through the early retirement as aforementioned), the labour contract will also end by law without severance pay.
If the employee has reached his or her retirement age but not yet started enjoying his or her basic pension insurance benefits, the local labour arbitral tribunals and people’s courts will scrutinise all relevant circumstances to determine whether the labour contract has ended or not.
Should the employee’s failure to enjoy the pension benefits be caused by the employer (e.g. the employer fails to register or make pension contributions, or complete retirement procedures for the employee), the employer might not be able to refer to the above Article 21 of the Regulation on Implementation of the Labour Contract Law and end the labour contract of the employee just because the employee has reached his or her statutory retirement age.
If the employee’s failure to enjoy the pension benefits is not attributable to his or her employer (e.g. solely because of his or her own failure, or the failure of his or her former employer), the employer would likely be able to refer to the above Article 21 of the Regulation on Implementation of the Labour Contract Law and end the labour contract of the employee who has reached his or her statutory retirement age. In practice, it is not uncommon in China that some employees have voluntarily proposed or agreed to making no or less social insurance contributions. Such agreement is however null and void due to its violation of the mandatory Social Security Law. Therefore, if an employer has concluded such an agreement with its employee and made no pension contributions for the employee, the employer later might not be able to argue that the employee’s failure to enjoy the pension benefits is not due to the employer’s fault but the employee’s only. In such case, the employer might have difficulty letting the labour contract end by law without severance pay even if the employee has reached his or her statutory retirement age and had in past proposed or agreed to making no pension contributions.
