Although the Chinese mainland's total population surpassed 1.4 billion by the end of 2019, according to the National Bureau of Statistics, it could start declining around 2025 since the country's total fertility rate has fallen below 1.5, the critical point of "low fertility trap".

Combined with rising aging population and consequently waning demographic dividends, China's declining fertility rate calls for some urgent measures. For example, multiple methods need to be adopted to raise the fertility rate and increase the pension age.

The pension system is the basic systemic arrangement to make sure people lead a good quality life in the sunset years and do not fall into poverty. And to do that, the authorities need to ensure financial sustainability.

Yet given the fast rising aging population and associated problems, the pension funds of some countries, including China, face huge pressure, which could lead to a financial crisis.

First, the rapidly increasing aging population will continue exerting pressure on the pension system. According to the World Bank, the number of people aged 65 or above in "post-demographic dividend" countries increased 1.74 percent between 1990 and 2000,1.78 percent between 2000 and 2010, and 2.33 percent between 2010 and 2018.

Second, people in developed countries live longer with the average life expectancy at birth exceeding 80. In particular, Japan's average life expectancy at birth is 84. So the dramatic growth of aging population means an equally dramatic growth in the number of not only pensioners but also years they have to be paid pension. Which are putting a strain on the pension funds.

Third, a rapid aging population means a relative decline in the working-age population. And since the working-age population, along with the government, contributes to the pension funds, it also means a decline in pension funds. The working-age population (people aged 15 to 64) in post-demographic-dividend economies began falling in 2017, with Japan experiencing negative population growth as early as in 1995 and the European Union in 2011.

To meet one of the most important challenges of this century, many governments have introduced a series of measures, with the increase in the pension age being a major one, as it could slow the speed of shrinking labor resources, lower the growth rate of new pensioners and therefore reduce the burden on the pension system. Some other economies facing serious aging population problems are therefore preparing to raise the pension age despite the social outcry.

For instance, Germany has decided to raise the retirement age from 65 to 67 years before 2029 while, the United Kingdom plans to increase it to 68 and Japan to 70. Given the productivity of some people even in their late 60s, deferring the retirement age to 68 or 70 is a viable option, as more than 65 percent of the people aged 60 to 65 are part of the labor force in some economies, especially in New Zealand, Sweden, Norway and Japan.

China has one of the earliest retirement ages in the world－the average retirement age being less than 55. Ironically, it also is one of the fastest aging societies in the world. People aged 65 or above will comprise 21 percent of China's total population by 2035, and more than 25 percent by 2046, making China one of the oldest societies in the world. In the next 30 years, China's elderly population will increase by 193 million and its working-age population decrease by 176 million thanks to the low fertility rate. Which will put immense pressure on the pension system and could result in a pension fund crisis if the current retirement age is not changed.

Therefore, China could consider gradually raising the retirement age to 65.The outline of the 13th five-year plan for human resources and social security, issued in 2017, has suggested to lay out a progressive plan to raise the retirement age during the 13th Five-Year Plan (2016-20) period. And since this is the last year of the plan, the government needs to take the economic and employment situation into full consideration and raise the retirement age.

As China's working-age population started to decline in 2018, according to World Bank data, and the unemployment rate is below 5 percent, the progressive raising of the retirement age will not have a negative impact on the employment situation if the GDP growth rate is maintained at 5-6 percent.

The author is a professor of demography at the Institute of Population and Development, Nankai University. The views don't necessarily represent those of China Daily.