Now retirement age in focus

EPFO backs enhancement in retirement age to ‘neutralise immense pressure on pension funds’.
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Representational ImageFile/ GK

Some time back, I received a group photograph from an acquaintance with a request to get it published in a few newspapers. It was a ‘retirement photograph’ where a few people including my acquaintance were holding a gift packet.

Even as all of them in the photograph were known to me, I got confused while locating the retiree in the photograph. When I enquired about the details of the retiring employee, I was surprised to learn that my acquaintance had attained the age of superannuation as his physique was as good as a young man and looked far from retirement age.

All of us are aware that the retirement age of employees at present ranges from 58 to 65 years in public sector enterprises and corporate entities. Basically the focus on retirement age in today’s column has been brought to the fore by the Employees’ Provident Fund Organisation (EPFO).

A few days back, as reported by the Economic Times, the EPFO pitched for substantially raising the retirement age of the employees in the country. In its Vision 2047 document, the EPFO visualizes immense pressure on the pension funds as India is projected to become an ageing society by 2047 with an estimated 140 million people above the age of 60 years.

In the backdrop of this projection, the Organisation pitches enhancement in the retirement age as an arsenal to reset the pension fund for longer duration. Besides, it mentions about the increase in life expectancy to back its recommendation.

However, the EPFO in its Vision document said, “Increasing the retirement age, going forward, could be considered in line with the experience of other countries and will be key to the viability of pension systems.”

The vision document has been shared with the states and discussions will soon start with other stakeholders including the employers and the employees as well.

Notably, EPFO is the custodian of a cumulative pension and provident fund corpus of over Rs.12 lakh crore of its nearly 60 million subscribers. The EPFO is likely to rope in the Pension Fund Regulatory and Development Authority, which administers the National Pension Scheme of the government, in this comprehensive plan.
Since retirement age of employees has been brought into focus, it merits mention of the National Statistical Office (NSO)’s Elderly in India 2021 Report which states that the country’s population , aged 60 and above, is projected to touch 194 million in 2031 from 138 million in 2021, a 41% increase over a decade lifted by a higher population and rise in life expectancy for both males and females.

A World Health Organization (WHO) report also merits a mention, stating that life spans are getting longer. In other words, the estimates confirm the trend for longevity. “Globally, life expectancy has increased by more than 6 years between 2000 and 2019 – from 66.8 years in 2000 to 73.4 years in 2019. While healthy life expectancy (HALE) has also increased by 8% from 58.3 in 2000 to 63.7, in 2019, this was due to declining mortality rather than reduced years lived with disability. In other words, the increase in HALE (5.4 years) has not kept pace with the increase in life expectancy (6.6 years),” reads the WHO report.

In the given circumstances, opinions galore that there is no harm to raise retirement age gradually to address increasing life expectancy in order to ensure that their national pension systems are both affordable and adequate.

Now, the issue has triggered a debate. Should retirement age be enhanced or not? Imagine a person retiring at 60, living till at least 75 (if not more), perhaps physically weakened, but still mentally at the top. What do they do with such a long retirement? And besides the fact that the increase in life expectancy leaves retirees with too much time on their hands and their skills unutilised. It also places a great burden to finance the social security and health benefits to the elderly. So, enhancing retirement age would also help to reduce the social security burden.

However, growing unemployment is one of the ‘plausible’ arguments against the retirement age enhancement. But, I don’t find any weightage in this argument. How much employment is available in the government sector? It may be roughly a few per cent. In so many cases, people start working after retirement in the private sector.

They get lucrative salaries and perks which are normally higher than what the government was giving them. We have many examples of officials joining politics after retirement and successfully discharging their duties in posts such as Central Ministers, Chief Ministers and heads of various Governments, semi-government departments.

The point here is that mostly the retired employees have proved helpful people. So the argument in favour of deferring their age-driven exit at least for some more years holds ground, as their huge experience and knowledge gained over a period of 3-4 decades can be utilised for the overall development of the country.

Immediate gain for the government is that the pension payout of all those thousands of employees who are going to retire in the next few years will be postponed. No doubt, the liability has to be paid at the end and it will swell up as additional years of service will lead to increase in the pension amount, gratuity, leave encashment etc.

But at the same time it will help the government to efficiently plan for better financial position to meet its liabilities not on ad hoc basis but in a systematic manner. So, this is all the more important given the country’s current fiscal situation where inflation is ruling the roost.

Meanwhile, this is also a fact that the efficiency of the government employees on the whole has always been subjected to question marks. Most of them have lost the common man’s faith as the majority of them lack the concept of social duty.

Be it matters to revenue, education (particularly government schools), health or matter pertaining to the collection of power tariff or any other revenue or for that matter, be it expenditure of funds, the performance of government employees has always been questioned.

So, employees’ performance too needs to be put under scanner and an under-performing lot needs to be sternly dealt with. A performance management system embedded with ‘perform or perish’ policy should be put in place to make employees accountable in a most transparent way.

Lastly, it would be a win-win situation for all – the government, its employees and the unemployed. It may look surprising and raise a question as to how the increase in retirement age would be benefiting the unemployed.

Let a youth imagine his parents retiring and he is still unemployed. This would mean more miseries to him. The enhancement of two years in retirement age is going to be a grace period for him to ensure that he gets himself employed – not necessarily in a government job.

Meanwhile, if the recommendation of the EPFO for enhancement in retirement age is acceded to, the government also needs to raise the maximum age limit of youth for jobs proportionately.

(The views are of the author & not the organization he works for)

Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.

The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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