BEIJING (AFP) -- 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.

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.

Some officials warn that raising the retirement age could exacerbate the unemployment situation, however, as it will take longer before people 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.

Better nutrition and healthcare have caused a dramatic rise in average life expectancy in China, which has risen from about 35 years in the mid-20th century to nearly 72 years now.

China has little other choice than to make people work longer before retiring, according to economists.

"There are normally two more options apart from raising mandatory retirement age in other countries -- to encourage more births and to let in more immigrants," said Huang Yiping, a Hong Kong-based economist with Citigroup.

"Both of these are obviously not viable in China which has such a large population," he said.

Residents in Beijing seemed divided on whether later retirement would be a good idea.

Others were vehemently opposed to it, citing the problem of limited employment opportunities.

"Rather than raising the retirement age, I think people should retire earlier than what the law now prescribes," said a state-owned enterprise employee in his late 50s, who said his surname was Cui.

"The unemployment situation is so bad, why should people retire even later and get in the way for those newly graduated? It is no more than a trick to fill the gaps left by misappropriated social security funds," he said.

Chinese investigators said last week a total of 7.1 billion yuan (900 million dollars) in social security funds had gone missing.