Chinese companies will have to start paying into employee pension plans this week, as Beijing pressures business to pick up the bill for an ageing population, reports the Financial Times. Many workers have long agreed to let employers off the hook for what should be mandatory pensions contributions, in exchange for higher salaries upfront.
However, China’s Supreme People’s Court last month outlawed such informal practices from September. Wu Jingli, a deputy chief judge, said its ruling would prevent business owners from exploiting their bargaining power and “actively address the issue of an ageing population”.
China’s pension system has come under strain in recent years as the working-age population falls and people live longer. Payments into the central social insurance fund—buoyed by government subsidies—increased 5.2% in 2024 to RMB 11.9 trillion ($1.7 trillion). But overall pension payouts last year rose at a faster rate of 7%.