Flexible retirement: impartial or prejudicial?

(Ecns.cn)--As more problems arise from an aging society, an increasing number of experts and officials are suggesting a flexible retirement system as a solution, which has sparked heated discussion among the public, points out China Newsweek.

"We are facing the fact that Chinese people are getting old before they've made enough money to retire. This is putting a huge strain on the retirement pension system and the sustainability of economic growth," Zhou Nan, a spokesman from the Planning Department of the National Development and Reform Commission (NDRC), tells the Global Times.

The newspaper cites data from the sixth national census, revealing that the population over 65 years old had reached 119 million, accounting for 8.87 percent of the total. The ratio surpasses the international threshold of 7 percent.

"An aging population means that more people will be retiring and therefore wanting a pension," says Yin Jiping, a teacher from the Sociology Department at Qinghai Normal University. "China's pension system is still in its infancy, and the pension fund scale should be expanded to cover more people, with more diversified investment practices to ensure sustainability," she suggests.

Like many other experts, Yin also proposes a more flexible retirement age and more incentives to encourage people to continue working, since the average life expectancy of the Chinese has been rising steadily, reaching 73.1 in 2008, according to a World Bank compilation of United Nations data.

China is also planning to establish a platform for a flexible retirement system, reveals Zhou Nan, as part of strategies to tackle the problem.

Currently, Chinese employees retire at fixed ages by law—60 for males, 55 for female government officials, and 50 for females in non-official positions. In this regard, people have to pay into pension accounts for at least 15 years before they retire.

Yet an apparently more pliable and reasonable solution faces some obstacles if it were to go into practice.

"Flexible retirement means that the individual worker is able to adjust his working-life according to his own preferences and circumstances," analyzes Daniel van Vuuren, author of the whitepaper "Flexible Retirement."

The paper looks at the possibility of providing insurance through flexible retirement and being able to adjust the start date of pensions at "a limited cost."

The Harvard Business Review ran an article in 2011 with an in-depth look at the relatively new workplace concept in the U.S., pointing out that flexible retirement is hindered and not yet possible for many companies because of regulatory restrictions starting with pensions and benefit regulations, and that legislation will need to be changed to overcome the challenges, which is often slow to happen.

The analysis also applies to Chinese companies. Some employees are worried that the new rule may cause inequality between a small group of people enjoying the benefits and the majority suffering unfair treatment.

"The market economy in China is not yet a legal economy with complete sense. So, once we adopt a flexible retirement system, I am afraid that company bosses would keep the employees they like and try to send away those fallen out of favor," notes Shi Shusi, news observer and senior editor at the Workers Daily.

According to experts who promote the new concept, employees should be able to decide their own retirement age, yet in reality it is usually the bosses that have the final say, reveals China Newsweek.

The magazine also points out that in general, only three groups of employees are reluctant to retire, namely leaders of companies, brainworkers (such as doctors and engineers), and workers of state-owned enterprises, whose well-above-average incomes would drop drastically after retirement.

In addition, some analysts say that a flexible retirement mechanism may dampen younger workers' enthusiasm for work, which might stifle the country's scientific and technological innovation, since statistics show that young and middle-aged talents under the age of 45 comprise China's main workforce.