View Full Version : Retirement Age to 62 years ???

14-08-2009, 10:31 AM
Dear Friends there is a strong rumour about enhancement of retirement age to 62 years. As per the news available in staff Corner.com, decision will be taken today's Cabinet Meeting and Prime Minsiter will announce the same during Indepenence Day Speech:confused:. Please see below the extract of the post or logon to http://staffcorner.com/blog/2009/08/13/retirement-age-of-central-government-staff-to-be-raised-to-62/

Retirement age of central government staff to be raised to 62?
Written by Administrator on August 13th, 2009

The government is actively considering raising the retirement age of all central government employees, including those in the armed forces, from the present 60 to 62 years.

Finance Minister Pranab Mukherjee has submitted a report to the prime minister 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 Department of Personnel and Training (DoPT) and the prime minister find the arguments forwarded by the finance ministry credible and convincing, the announcement may come as early as August 15, as part of Manmohan Singh’s Independence Day speech.

The Cabinet may discuss the matter tomorrow.

Although the finance ministry is making a strong case for the move, the DoPT is taking time to make up its mind, possibly out of consideration for the 1979 batch of the Indian Administrative Service (IAS) and other central services. Officers of the 1979 batch have been empanelled for promotion to the ranks of additional secretary and secretary but can take up their posts only after the present incumbents retire. If an announcement extending the retirement age comes before November, a batch of empanelled joint secretaries stand to lose their future ranks. In turn, this will also affect those who joined the central administrative services in 1980. The DoPT also says that the age profile of Indian bureaucrats, 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 armed forces personnel of the rank of Lieutenant General and equivalent 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 to more than 100,000 employees. While salaries will have to continue to be paid, this will be cheaper than paying upfront benefits like gratuity.

This is all the more important given the government’s other financial liabilities on account of stimulus spending and one drought, though the effects of the latter will kick in only in the next fiscal year. The fiscal deficit is 6.8 per cent of gross domestic product this year and a two-year lag in paying pensions will help in bridging this.

In 1998, the National Democratic Alliance government had raised the retirement age from 58 to 60, a move that benefitted 90,000 government servants 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 which had just been implemented by the then United Front government. In 2003, the government also right-sized the central government employee workforce by 30 per cent.

Every time the Centre announces an increase or concession on pay packages, both public-sector units and state governments follow suit. If the prime minister does decide to raise the retirement age, state governments and Public Sector Units (PSUs) will mirror this action. This has its own implications for many cash-strapped states like Punjab.

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.

14-08-2009, 10:59 AM
Dear Friends,

In order to post pone pension payments it has been proposed by he FM to increase the retirement age by 2 years. After two years what will be done?., again will it be raised?. May be the officers at the verge of retirement be happy about this news. Already there is much stagnation and employees are not getting even a single promotion even after 18-24 years of service. I favour reduction of retirement age from 60 to 55. This will creat lot of employment opportunities and young talents will be available. Of course experience is a must. Can we say in a department all those who have put in more than 30 years of service are really experienced. Certainly not. Only a very few will be really experienced. But the others may be expperience in the otherway around and not in day today government works/policies. In the name of experience we are compromising the pace of government activities. This is my humble opinion.

14-08-2009, 04:53 PM
It appears that the government is once again mulling over the problem of huge run up on pension payments. as it did a decade ago when it eventually increased the retirement age of its employees from 58 to 60. In partial justification, now it may cite the discourse in western countries which are grappling with the problem of the ratio of the retired to working population. However, unlike in the case of our country, when European Countries talk of increasing retirement age as a balancing act to offset the adverse demographic profile of its working citizens it is meant for all the people in the country because of guaranteed social security benefits for all of its people.. But over here it is only the government . servants. who are, in any case, not perceived as greatly enthusiastic about output orientation , will benefit by this ill considered measure.

The correlation between longevity and retirement age in foreign countries is often selectively presented by those who think it is a good idea at least in the short term to reduce the government expenditure. Japan has the highest figure for longevity but its mandatory retirement age is still 60. In China public sector officials have to retire in their mid fifties. Only very recently the Chineses Labour Minister has ruled out any possibilty raising retirement age despite increasing financial defecit.
Indian leaders and economic pundits brag about demographic dividend in every development seminar, but the government appears not interested in cashing it fot itself. In fact nowadays, it is a good augury that interest among educated youth has been revived to join government sector evidenced by mushrooming training institutes for preparing them for civil services. Increasing the retirement age at this time may shatter the dream of aspiring new entrants. Young new entrants to the government service will definetely offer better quality of service to its citizens since they can be expected to retain their motivation at least for a few years until they are disenchanted by the examples of some idle seniors..

In the matter of effecting economy in expenditure, the government, it seems, is for ever chasing its own shadow. If some measure could be found to relate the output of government employees to the input costs over ten year period there will not be much difference whether they retired at 58 or 62. Reckoned in terms of costs and prices of a base year of say, 1989 and discounting the effects of technology it is quiet likely that the productivity gains to be negligible.

Another reason cited in supprt of raising the age of retirement is the increasing span of life. But this does not show how healthy the people who have crossed say fifty are. Public health pundits in India talk about an epidemic of diabetes and early onset of Blood Pressure and cardiovascular diseases even among men and women in their mid forties. . Therefore by increasing the retirement age the percentage of chronically ill requiring monitoring will form a considerable percentage of the workforce. Obviously its ill effects on productivty are bound to affect the quality of service..

Some others cite the reasons of offsetting the loss of expertise and experience of particularly senior officers who though healthy have to be retired early. If one looks around retired government servants and how they occupy thenmselves post retirement , they are either reemployed in numerous commissions and regulatory and other bodies, many of them superfluous, or employed by the private sector as lobbyists. The Second Admintative Reforms Commission and the Sixth Pay Commission have made valuable suggestions to promote mobility between private sector and the government and raising the age of retirement at this satge will fly in the face of such beneficail changes to be made in the coming years in governance.

It is a truism that the entrenched bureaucrats who are near retirement age will have a vested interest in the matter of raisng the retirement age . If only the government could do it for a favoured few, without raising the ire of other government servants, like fixed tenures for a few top posts, it would do it.

What is disappointing at this juncture is that the Prime Minister himself appears to be enthusiastic about rasing the age of retirement. In this case it is our wishful thinking that he acts not as an economist in search of quick fixes but a long term visionary to change government working culture freeing itself from the colonial vestige called IAS and its self aggrandizing habits.

14-08-2009, 07:19 PM
Dear Shri RS sir,

I thought you would hit the nail harder on the head.

After all, the entire SCPC manipulations/ monouvres/ misonterpretations/ misapplications etc everything had been done to PIRATE the entire benefits of REVISIONs to upper echelons only viz. the ELITE group among the Govt. employees.

After having achieved the objective- how can you expect that the top echelons to disapper easily from the scene WITHOUT enjoying the fruits for a couple of years at least. Feelings are genuine.

The UNBRIDLED EGO to maintain their imposed supremacy at all times without competetion upto the top two levels by the ELITE is well realised in the RESTRICTION of the Group A officers of all other ORGANISED SERVICES upto PB 4 only in the new provisions -WHICH IS NOW WITHOUT top scale S30 which has been taken out to form the new HAG Scale!

What a chaos/ havoc they are creating?.

Two more years- in whose interest? Certainly not in the public interest.

Pranabda- normally wd not relish the idea of such a proposal as it is supposed to affect the employment/ intake potential in the Govt. sector and create unemployment.

On the contrary when authorities are iprepared to print 2 lakh crores of new currency ( another 50% u can add fake in the grey market), why worry about money supply?



15-08-2009, 10:06 PM
Dear All,
I have read the posts of S/Sh. Sundaram and VN on the proposal to extend the retirement age to 62. I have my own reservations on the subject and cannot agree to all the views expressed therein . But those who want to really participate in the discussion on the subject could read the special report on ageing in the 'Economist' dt. 27th July. Extracts from the report are reproduced for reference.
"The end of retirement
Jun 25th 2009
From The Economist print edition

WHEN Otto von Bismarck introduced the first pension for workers over 70 in 1889, the life expectancy of a Prussian was 45. In 1908, when Lloyd George bullied through a payment of five shillings a week for poor men who had reached 70, Britons, especially poor ones, were lucky to survive much past 50. By 1935, when America set up its Social Security system, the official pension age was 65—three years beyond the lifespan of the typical American. State-sponsored retirement was designed to be a brief sunset to life, for a few hardy souls.
Now retirement is for everyone, and often as long as whole lives once were. In some European countries the average retirement lasts more than a quarter of a century. In America the official pension age is 66, but the average American retires at 64 and can then expect to live for another 16 years. Average spending on public pensions across the OECD is now the equivalent of more than 7% of GDP (they cost America just 0.2% back in 1935). In some countries the current figure
could double by 2050, to say nothing of the cost of private pensions and extra spending on health and long-term care.

Grey and proud of it
Although the idea that “we are all getting older” is a truism, few governments, employers or individuals have yet come to terms with where longer retirement is heading: the end of the whole concept (see special report). Whether we like it or not, we are going back to the pre-Bismarckian world, where work had no formal stopping point. That reversion will not happen overnight, but preparations should start now—to ensure that when the inevitable happens it is a change for the better.
It should be for the better because it is being partly driven by a wonderful thing: people are living ever longer. Life expectancy has been rising by two or three years for every ten that pass, despite repeated forecasts that it was about to reach its limit. Centenarians used to be rarer than hens’ teeth; now America alone has 100,000 of them. By the end of this century the age of 100 may have become the new three score and ten.
This imminent greying of society is compounded by two other demographic shifts. First, in most rich countries women no longer have enough babies to keep up the numbers (a prospect that may please a lot of greens but not many governments); and the huge baby-boom generation, born after the second world war, has begun to retire. In 1950 the OECD countries had seven people aged 20-64 for every one of 65 and over. Now it is four to one—and on course to be two to one by 2050. That will ruin the pay-as-you-go state pension schemes that provide the bulk of retirement income in rich countries.
It is tempting to think that some of the gaps in the rich countries’ labour forces could be filled by immigrants from poorer countries. They already account for much of what little population growth there is in the developed world. But once ageing gets properly under way, the shortfalls will become so large that the flow of immigrants would have to increase to many times what it is now. Given the political resistance to even today’s levels of immigration (as shown up in the recent elections to the European Parliament), that, alas, looks unlikely.
So individuals, companies and governments in rich countries will have to adapt. There are some signs the first two are beginning to do that. Many employers remain prejudiced against older workers, and not always without reason: performance in manual jobs does drop off in middle age, and older people are often slower on the uptake and less comfortable with new technology. But people past retirement age would not necessarily carry on in the same jobs as before. In Japan, where pensions are Spartan and lots of people are still working in their later 60s and even 70s, big companies like Hitachi have found ways of re-employing staff after retirement—but in a different capacity and, significantly, at lower pay.
Elsewhere employers have been less inventive. But retailers such as Wal-Mart or Britain’s B&Q, and caterers such as McDonald’s, have started hiring pensioners because their customers find them friendlier and more helpful. And skills shortages are already creating opportunities: in the past year or two a dearth of German engineers has caused companies to bring back older workers. Once labour forces start declining, from about 2020, employers will no longer have much choice.
As for the older workers themselves, many of them seem keen enough to carry on beyond retirement. A recent Financial Times/Harris poll showed most Americans, Britons and Italians would work for longer in return for a larger pension (though Germans were much less enthusiastic). This surely makes sense: as long as the job is not too onerous, many people benefit in mind and body from having something to get them out of the house. Many baby-boomers say they never want to bow out altogether, though they would often prefer to put in shorter hours. If they want to go on working, they will have to accept that pay can go down as well as up.
It will all work out, sort of
Can governments make sure this inevitable adjustment goes smoothly? In the recent past some policies have bordered on the demographically insane—for instance “job-creation” schemes that encourage older workers to take early retirement. Many things that make sense anyway, such as making benefits more portable, encouraging immigration, promoting private saving or reforming health care (see article), make even more sense now. Banning mandatory retirement ages in the private sector (as America has done) looks sensible, as does creating conditions in which people can retire more gradually. Above all, the retirement ages for state pensions need to be put back. Recent increases to 67 or 68 are doing no more than compensate for the likely rise in life expectancy: 70 would be a better figure. So far only Denmark has taken the radical step of indexing the pensionable age to life expectancy.
Some of this will be unpopular. Private pensions, which might make up for some of this, last year lost nearly a quarter of their value, a terrifying $5.4 trillion. But as Herb Stein, an economist, pointed out, “if something cannot go on forever, it will stop.” Better to try to enjoy the consequences.


16-08-2009, 07:56 AM
Respected Sirs,

In continuation of all the above posts discussing on the subject, I reproduce below an article appeared in the DNA on 15.8.2009 in this regard forwarded by a senior veteran for kind information.

`To save money, Centre may up retirement age
Arati R Jerath / DNASaturday, August 15, 2009 2:21 IST
New Delhi: The Manmohan Singh government is once again weighing the pros and cons of increasing the retirement age for government employees from 60 to 62 years. Though it has not taken the shape of a formal proposal yet, the finance ministry is understood to have prepared a detailed note on the issue and sent it to the prime minister's office (PMO).

Interestingly, the government conducted a similar exercise last year but shelved the idea, largely because of fears that a higher retirement age would adversely impact employment generation and create resentment in the bureaucracy because of blocked promotional avenues. At that time, it was the Department of Personnel and Training (DoPT) that was asked by the PMO to study the issue and prepare a report.
This year, the finance ministry has come into the picture because of the urgent need to create resources as the government prepares a contingency plan to tackle the fallout of the countrywide drought.

One of the strongest arguments in favour of raising the retirement age is immediate savings for the government in terms of gratuity and pension payments over the next two years. With some 1.5 lakh employees expected to retire in this period, the savings are estimated to be in the region of Rs15,000-20,000 crore.

The Sixth Pay Commission has hugely inflated the government's salary bill, including expenditure on pension. The allocation for pension in the 2009-10 Union budget alone is Rs34,980.35 crore, a 40% increase over last year.

The government is also staring at the possibility of a spiralling fiscal deficit as the spectre of food imports, particularly sugar, looms on the horizon. The deficit is already pegged at 6.8% this year.

While the fiscal arguments are tempting, the finance ministry note has also detailed the downside of raising the retirement age. The negatives include fuelling unemployment, which would create resentment among the youth, and stagnation for those waiting in line for promotions.

The IAS batches of 1976 and 1979 would be the worst-hit. The former are waiting to move into posts of secretary when vacancies arise as incumbents retire. The latter are mostly joint secretaries awaiting promotion to the rank of additional secretary. All of them stand to lose out.

The DoPT, which is the nodal ministry for all administrative decisions related to the bureaucracy, has not come into the picture yet since the move is still at a very preliminary stage. But it is believed to have unofficially conveyed its views about the likely negative impact on the morale of the bureaucracy.

The issue has not come up for discussion within the Congress yet as the government is still to make up its mind whether to go ahead. A party source questioned the wisdom of the move, pointing out that it would run counter to the Congress's promise of job creation'.

Best Regards