Monday, November 01, 2010

Will India follow China and France in raising retirement age to 62 years?

INDIAN policy makers might have followed many a Chinese model, but here is the million dollar question --- will India too emulate China last week which raised the retirement age from 60 to 62 years, a move that was even considered by Manmohan Singh government during the days of economic tsunami in mid-2009? The debate has bounced back in corridors of power after France too is likely to increase the country’s minimum retirement age from 60 to 62, as its Upper house has already given its nod despite fierce protests from young population of the country who fear a possible job cut as a result of the move.
For China, the move is purely economic as the raising the retirement age is expected to ease pressure on pension fund. Chinese pension fund is currently facing a shortfall of about USD 194 billion according to reports published by 'China Daily'. About 30% of Chinese 1.33 billion people are covered by the pension system.
The economic rationale behind raising the retirement age by two years is that the concerned government won’t have to pay post-retirement benefits at least for two years, and the savings can be used for tiding over any economic crisis.
But for India, the proposition is not as simple as it is in China. Here political considerations would finally dictate whether UPA government would raise the retirement age to 62. If UPA government wants to give over 5.5 million Central government employees a bonanza, it will also keep in mind whether the move would freeze new recruitment for two years forcing young voters take a negative view on the entire issue.
In China, existing superannuation system is 32 years old, but the Chinese people's average life expectancy rose from 67.9 years in 1981 to 71.4 years in 2000.
In India, the age of superannuation was increased from 55 to 58 during the time of Jawaharlal Nehru after India’s war with China in 1962. The NDA government under prime minister Atal Bihari Vajpayee increased it to 60 in 1998.

1 comment:

  1. With the increased life expectancy and increasing the age of entry into civil services there is justification in increasing retirement age to 62.But there should be a rider.The corrupt,imcompetent and politically inclined officers should be made to retire at the age of 55.The tax payer should not be burdened with such officers.