Population Aging and Pension Reforms in China

IMF Working Papers, February 20, 2026

Source details

China is experiencing rapid population aging and a declining workforce, posing significant economic and fiscal challenges, especially to the pension system.
The paper examines the evolution of China’s pension system, assesses its gaps relative to international peers, and evaluates the macro-fiscal implications of population aging and various pension reforms.
Analysis uses a calibrated overlapping generations model that explicitly incorporates rural–urban disparities.

Population aging alone can slow annual GDP growth by about 2 percentage points between 2024 and 2050.
Pension spending can rise by nearly 10 percentage points of GDP due to population aging.
The 2024 retirement age reform:
- Raises GDP growth by 0.2 percentage points annually.
- Reduces pension spending from 15.3 percent to 11.9 percent of GDP by 2050.

Doubling Residents Pension Scheme benefits (described as currently inadequate).
Linking pension benefits to life expectancy.
Further increasing the retirement age beyond the 2024 reform.
Promoting urbanization to address rural–urban disparities and labor supply dynamics.
The calibrated overlapping generations model is used to quantify effects of these policy-relevant reforms on fiscal and macroeconomic outcomes.

Population aging presents material downside risks to growth and large upward pressures on pension spending absent reform.
The 2024 retirement age reform materially eases long-term growth and fiscal sustainability pressures but does not fully offset aging-induced fiscal pressures.
Reforms targeting Residents Pension Scheme adequacy, life-expectancy indexing, retirement ages, and urbanization can have significant effects on both fiscal balances and macroeconomic outcomes.

Population Aging and Pension Reforms in China — Boele Bonthuis, Yongquan Cao, Christoph Freudenberg (February 20, 2026).