Can the Policy of Increasing Retirement Age Raise Pension Revenue in China—A Case Study of Anhui Province

Abstract

With gradual progress in the medical field and the rising living standard of people, the life expectancy of people is gradually increasing. Unfortunately, this positive development contributes significantly to the aging of societies and creates huge challenges for pension systems. In order to mitigate the pressure on its pension system in the coming years, China is considering increasing the retirement age, just like many other countries. Based on the wage data of urban employees, pension revenue and expenditure data of employees in Anhui Province over the years, we constructed a model to predict average wages and forecast the revenue of the urban pension system from 2022 to 2032. We predicted the pension revenues by simulating an adjusted retirement age under two different schemes. The results of the study showed that the policies of appropriately increasing the retirement age can raise pension revenue. Compared with a one-step retirement age change scheme, a rolling retirement age change scheme that increases the retirement age by several months each year was found to be more suitable for the healthy development of the pension system.