In a never-before move, India plans to revise a retirement age from 60 to 65, starting from 2025. Once handed down, this edict shall give five further years to the employees for job security and earning extended income.
Why Shift to 65?
The rationale for considering the increase in the retirement age is:
- Life expectancy has increased and people are fitter today and hence can work for longer.
- It decreases the pension liabilities of the government for some years, thereby decreasing the burden on the public retirement funds.
- There is a shortage of experienced professionals in areas like health care, education, and administration where competences and continuity are of essence.
Who Will Benefit?
If implemented, the decision would benefit:
- Central and state government employees
- PSU workers
- Those working in key service sectors where there are shortages
This will mostly directly impact around 1 crore employees, especially those who were slated to retire between 2025 and 2030.
Economic & Financial Impact
Workers will benefit from the extension in the retirement age in terms of:
- Five more years of salary and allowances
- Higher retirement benefits, as the pension amount is often calculated from the last salary drawn
- Extended periods of medical and government benefits
However, this might be detrimental to younger job seekers, for fewer vacancies would arise in the short run for them.
What Comes Next?
As of yet, the proposal is still being deliberated on and would require:
- Consent from the Union Cabinet
- Possible negotiations with employee unions and department heads
- Gazette notifications and updates to service rules
If approved in calendar year 2025, implementation may begin in a phase-wise manner in departments.
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