Published On: Mon, Apr 2nd, 2018

Govt mulls raising retirement age to 62 yrs

New Delhi: After Madhya Pradesh government on Friday raised the retirement age of state government employees to 62 years, the Central government is actively considering raising the retirement age of all central government employees from the present 60 to 62 years.

The centre may raise the retirement age of its employees to 62 years.

Finance Ministry sources said, “the Finance Ministry have to submit a report to the prime minister’s office (PMO) through the Department of Personnel and Training (DoPT) outlining all the pros and cons of the move, including the “cascading effects” on government employment and the huge savings, at least for two years, on account of retirement payouts.

If the DoPT and the PMO find the arguments forwarded by the finance ministry credible and convincing, the announcement may come as early.

Before it, the Cabinet will discuss the matter.”

Although the finance ministry is making a strong case for the move, the DoPT is taking time to make up its mind.

The DoPT will hesitate, whether to accept the proposal and may say that the age profile of central government employees, instead of becoming younger, will become older, out of tune with the rest of the world.

For the finance ministry, the gains from the move are clear. The pension payout of all employees who were to retire this year will be postponed by 24 months; the government will also defer by two years the liability of paying pension. While salaries will have to continue to be paid, this will be cheaper than paying upfront pension benefits but Minister of State for Personnel Jitendra Singh recently said in Parliament that there is no plan to increase the retirement age of central government employees from existing 60 years to 62 years.

In 1998, the Atal Bihari Vajpayee government had raised the retirement age from 58 to 60, a move that benefitted 60,000 government employees and 50,000 defence personnel.At the time, the logic was: the retirement of 140,000 employees would have cost Rs 5,200 crore whereas paying salaries cost only Rs 1,493 crore. That move came in the wake of the 5th Pay Commission report, while 7th Pay Commission didn’t comment on retirement age.

If the decision is finally taken, it will only be the third time the government will have raised the retirement age. Jawaharlal Nehru was the first prime minister to have increased the age of superannuation from 55 to 58 following the 1962 war with China. The Atal Bihari Vajpayee government did it a second time in 1998.


About the Author