China may raise the retirement age in a bid to rein in the enormous welfare burden associated with a rapidly ageing society, state media has said.

The initiative comes from the Ministry of Labor and Social Security, which is worried about ballooning spending on pensions, the China Economic Weekly reported.

"We will put forward a proposal on raising the retirement age ... by the end of this year," the magazine quoted an unidentified ministry official as saying.

China's social security fund, in charge of paying out pensions, was 800 billion yuan (102 billion dollars) in the red last year, up steeply from 36 billion dollars in 2000, according to the report.

Although the legal retirement age in China is 60 for men and 55 for most women, many employees of state-owned enterprises have been allowed to retire in their 40s or 50s to make openings for new graduates and others.

Some officials warn that raising the retirement age could exacerbate the unemployment situation.

If people retire at an older age, it will take longer before they can relinquish their jobs to younger members of the work force.

"We need to balance pension fund needs and unemployment," a central government official was quoted by the report as saying.

Many developed countries face similar problems in funding their pension schemes and several have proposed increasing the retirement age so as to ease the burden.