Case for hike in retirement age to 62 for central government employees

The Andhra Pradesh government with the implementation of the 7th pay commission recommendations has also hiked the retirement age for the state government employees. The state has decided to increase the age of retirement from 60 to 62 years. The move has once again opened the debate on whether the retirement age of central government employees needs to be hiked from 60 to 62 years or more.

It was in 1998 that the last time the age of retirement (superannuation) for the central government employees was hiked. It was increased from 58 to 60 years. The increase was based on the recommendations of the Fifth Central Pay Commission. 

After that, a lot of rumours were afloat that the government is planning to hike the retirement age of the Central Government employees to 62. However, no concrete move was taken in this regard. 

With the increase in life expectancy and decrease in fertility rate, individuals are living longer than before. This has led to an increasing ageing workforce as well. As global access to healthcare facilities improves and becomes more affordable in lower-income groups, life expectancy might increase even further. Senior citizens will grow more dependent on the government for pension pay-outs to meet their post-retirement living expenses. 

The current retirement age in India is 60 years. Globally, especially in the west, considerations of revising the retirement age have made significant strides in the recent past. The UK, for example, is already planning to increase the retirement age from 65 to 68 years over the next two decades.

In August 2021, the Economic Advisory Council to the Prime Minister has recommended increasing the retirement age saying an increase in life expectancy is expected to continue due to better health infrastructure and allow aged people to work longer than any previous generation. It recommended an increase in a phased manner as India is a young nation with a high working population. It also underlined delaying retirement age to increase the working-age population or it may not reduce the pressure on the social security system and is difficult for a country to achieve.

The retirement age at India's central universities is currently 65 or 70 years. Raising the retirement age for other professions will also allow newer generations to benefit from the elders' knowledge and experience. More importantly, it will save India crores of rupees in pension payments, which is especially crucial given the country's mounting economic uncertainty. This should be treated as a critical need in the draught national policy for seniors, and policy interventions should be made to provide seniors with appropriate possibilities to work beyond their existing retirement age.

Given the projected slowing in population growth, an increase in the senior population, and rising life expectancy in India, the Economic Survey Report 2018-19 was the first to propose changing the retirement age. Gradually raising the retirement age would help to ensure the viability of pension systems while also reducing the financial strain on the national budget. It will also improve female labour force participation in older age groups, according to the Economic Survey.

Furthermore, raising the retirement age will encourage competent and qualified seniors to stay active while contributing to national prosperity. Governments should therefore continue to help people in their 60s and 70s by offering them alternative job opportunities such as teaching in schools, consulting/advisory roles with government/private enterprises, and so on, in order to keep them engaged and productive. Japan, for example, has implemented a voluntary re-employment system for retirees who can return to work as part-time employees with varying work hours and wages at their leisure. This will allow those who want to re-enter the workforce after retirement, in particular, to invest in needed skill upgrades and live a healthier lifestyle.

Also read: Economic Advisory Council recommends hiking retirement age