Rapidly greying Shanghai is allowing people to delay their retirement by up to five years as it tries to plug the widening hole in its pension pool. From this month, in a mainland first, the mandatory retirement ages for clerical and professional employees - 60 for males and 55 for females - will no longer apply if the workers are healthy and want to carry on in their positions. They will continue to contribute 8 per cent of their salaries to Shanghai's pension pool - to which employers contribute 20 per cent of their salaries - but will be exempted from paying medical insurance. When they do retire - no later than 65 for males and 60 for females - they will receive bigger pensions. An official from the municipal human resources and social security bureau told Xinhua the policy could motivate highly educated professionals to work longer and contribute more to the society. Demographers say postponing the retirement age is a must for Shanghai, which has a rapidly ageing population and a pension pool with rapidly rising debts. The current mandatory retirement age was introduced in the 1950s and reconfirmed in the 1970s. But when the People's Republic was founded in 1949, average life expectancy was less than 50 years. In Shanghai nowadays, women are expected to live an average of 85 and men 79, according to Dr Peng Xizhe, director of the school of social development and public policy at Fudan University. Peng says 4.6 million people in the city contribute to the pension pool every year and there are 3.1 million people drawing from it. 'It means every 1.5 workers support one elderly person. It's hard to maintain this situation.' As early as 1979, 7.2 per cent of Shanghai's population were above 65, higher than the 7 per cent benchmark for an ageing society set by the UN. At the end of 2008 there were two million Shanghai permanent residents at least 65 years old - 15.4 per cent of the city's permanent population. Some projections say the elderly population will rise to 33 per cent of the total by 2020. Yu Zhengsheng , the city's Communist Party chief, says Shanghai's pension fund cannot make ends meet. In 2008 the municipal government subsidised it to the tune of 18 billion yuan (HK$20.83 billion) and last year it injected 25 billion yuan. 'For many years in the future, pension funds relying on and requiring a higher percentage of fiscal support will exist. This situation will become more and more serious, because of the ageing problem,' the China Economy Weekly quoted Yu as saying. But Peng says that Shanghai allowing people to postpone their retirement will have very limited role in easing the pension fund's gigantic defaults because it's a soft policy that is only optional and it was up to two parties, employers and individual elderly employees, to decide whether to keep on working. He says 40 per cent of people already worked in their first five years of retirement, while receiving pensions at the same time. Zhang Yunqiang, 72, has worked as an editor, full-time or part-time, for three successive employers since retiring 12 years ago. 'I don't feel any tiredness because I enjoy my work,' he says. 'I am completely qualified and they need me. The magazines I compile are popular.' Zhang is paid about 3,000 yuan every month, in addition to the 2,000 yuan monthly pension he receives. 'For us retired people, they will not offer too much,' he says. But other people, who don't like their jobs, are looking forward to retirement. This new policy also applies to people engaged in lower-level and labouring jobs, whose retirement age is 60 for males and 50 for females. Xu Xiaohua, a 46-year-old saleswoman, says she's looking forward to retired life in four years. She earns 5,000 yuan a month, but says she has to work extremely hard. 'My mother died at the age of 68. I am afraid I won't live so long as 90 years, like those experts predict for Shanghai women's longevity.' Zuo Xuejin, an economist from the Shanghai Academy of Social Sciences, said other mainland cities would follow Shanghai in allowing people to postpone their retirement - and could even raise retirement ages - because they also faced ageing problems. Zheng Bingwen, a pension researcher at the Chinese Academy of Social Sciences in Beijing, said the total pension default nationwide had reached 1.3 trillion yuan.