Why China’s public sector workers are in a rush to retire early
- Some employees are heading for the exits, worried they will be worse off when a new pension scheme kicks in from October
Some Chinese public sector workers are opting to take early retirement in the coming months, fearing they will lose out when a new pension scheme kicks in from October.
Beijing announced a national pension reform plan in 2015, aiming to make the public and private sector retirement schemes more equitable. The public sector pension system has long been criticised as too generous compared to the private sector.
Under the new system, China’s 8 million civil servants and 32 million employees of public institutions must pay 8 per cent of their salaries into the pension scheme, while their employers contribute 20 per cent.
Previously, public sector workers did not have to make any contributions and were paid up to 80 per cent of their salary as a pension when they retired.
The transition period for the public sector to make the switch to the new scheme ends in October.