Cover Story

To retire now or later?

With increase in life expectancy, it makes eminent sense to raise the retirement age of government employees to 65 years

dec2014-img-11THE little murmur about increase in the age of superannuation of Central government employees has been quashed for the time being by the announcement of the government. However, the question whether people should continue working beyond the age of 60 years, not only in the government but also in private companies, lingers on and needs to be debated. It is really surprising that neither the civil service community nor civil society activists have raised the matter in public discourse. The activists seem to be obsessed with finding fault with bureaucratic functioning and unconcerned with improving their productivity in governance.

In my view, a policy debate on the issue of civil service reforms should also include the age of superannuation of civil servants. Such a policy debate should not merely be a political debate. The question should be seen from at least two angles: from the viewpoint of the employee and from the larger perspective of the employer, which is the government in this case. We are of the view that it is the opportune time to revise the age of retirement upwards.

The employee looks at his physical suitability, his financial requirements after retirement and continuance of an occupation on superannuation, and so on. He starts thinking of life after retirement at least five years before the actual event.

On the other hand, the government has to consider the elements of usefulness of the employee to the job, the prospects of younger employees, recruitment of new entrants, and so on. Besides being interested in the welfare of aging employees, the government has to consider whether it would be beneficial to the system and governance to keep experienced officials in service for a longer period. In May 1998, the Government of India decided to raise the retirement age of Central government employees from 58 years to 60 years.

The government has to consider whether it would be beneficial to the system and governance to keep experienced officials in service for a longer period

The decision was taken by a new governing coalition within two months of its taking up the reins of government. In fact, in the month of May 1998, two abrupt decisions were taken—exploding thermo-nuclear devices in Pokhran and raising the age of retirement. In both the cases, there were no prior deliberations within the government. In both the cases, the decisions were taken and then the process of carrying them out was delineated. The decision to increase the age of superannuation was mainly based on the recommendations of the Fifth Pay Commission. I remember the deliberations in the Union Cabinet when it was introduced by me with some trepidation. I had expected a lively debate by informed ministers like Yashwant Sinha, Rangarajan umaramangalam, Ram Jethmalani and Suresh Prabhu, besides others. I was prepared to answer the possible queries in the Cabinet. Curiously, the proposal was approved without any discussion.

WHY was the decision to increase the age of retirement taken? To the best of my recollection, it was not a priority in the election manifesto of the National Democratic Alliance in 1998-1999, nor was there a financial emergency of a serious order. I think it was decided because the Fifth Pay Commission had, along with other recommendations, suggested that the Central government employees should continue in employment till the age of 60 and also because many senior bureaucrats, who were on the verge of retirement and were close to the new political executive, wanted to continue in authority.

Be that as it may, it cannot be denied that people today are living longer than in the 1950s when the age of retirement in the government was 55. The world’s population is steadily growing older. The prospect of enjoying a retirement lasting 20 to 30 years is already a reality for many in the 34 countries which make up the Organisation for Economic Co-operation and Development (OECD). In India too, most of the retirees work in gainful employment for years after getting relieved of their formal jobs.

In my view, it makes sense to raise the age of retirement in government to 65 years, provided it is accompanied by twin provisions of weeding out the less competent and worn-out employees at stipulated intervals and complete estoppels of re-employment after retirement. I must mention that I had insisted on amending the Fundamental Rules for prohibiting all extensions in service and it was duly incorporated in the All India Service Rules. It was clearly said in the amended FR 56 (d) that ‘no government servant shall be granted extension in service beyond the age of retirement of 60 years’. However, the Rule was amended on the day I retired from the Indian Administrative Service to provide extension to my successor beyond 60 years.

It makes sense to let suitable officials continue in service beyond 60 years because it meets the requirement of the government, utilising the best of talent, accumulated knowledge and experience in the civil service and, at the same time, satisfying the need of those civil servants who want to continue working for a few more years without having to look for another employment elsewhere or hankering after re-employment by resorting to questionable conduct. I think the lure of re-employment would not weaken at 62 years (as was being contemplated by the government) but would possibly abate at reaching 65. Arguably, it is the age at which people get maximum financial and way-of-life benefits from working, and if they work beyond this age they see their way-of-life benefits decline.

Another argument that is universally advanced to justify higher retirement age is of improved longevity owing to better healthcare and nutrition. In most developed countries, the age of superannuation has been rising with longer life expectancy. In Europe, it varies between 65 years (Belgium, Netherlands, Greece, Austria, Denmark, Sweden, Switzerland) and 68 years (Britain, France). In a number of countries, it is 67 years (Spain, Germany, and Norway). In Germany, there is a move to raise it to 69 years.

It makes sense to raise the age of retirement in government to 65 years, provided it is accompanied by twin provisions of weeding out the less competent and worn-out employees at stipulated intervals and complete estoppels of re-employment after retirement

In our country, the life expectancy at birth was about 40 years in the early 1950s and has increased to about 70 years today. In fact, life expectancy has roughly been registering an increase of five years in every decade. For instance, it has increased from 63.9 years in 2004 to 69.6 years in 2014. Thus, since Independence, against a longer average life span of 30 years, the working period has increased by five years only. So, for the average person, 65 years seems like a perfectly reasonable retirement age given the improvements in life expectancy since 1950.

The next question is how these additional years of life expectancy should be spent. Shouldn’t improved mortality be utilised for increasing productivity in society? One view is that the retirement age should be so adjusted that the expected number of years after retirement remains unchanged. Another view is that the retirement age should be so set that the ratio of the expected number of years spent in retirement to the expected number of years working remains constant. This seems to be a better measure because it distributes gains in life expectancy into both working years and retirement years.

FINALLY, though we cannot attach professional competence to parliamentary committees in India, it may be mentioned that a parliamentary committee had recommended in February 2014 that retirement age should be increased from 60 to 65 years, citing the increase in the ageing population and its productivity. The Standing Committee noted that the population of senior citizens is expected to rise to 12.4 per cent by 2026 against 7.5 per cent in 2001 and the numbers of those above 60 and 80 years of age would see a big increase of 326 per cent and 700 per cent, respectively, by 2050.

Similarly, the election manifesto of one of the major political parties in the 2014 Lok Sabha elections promised to increase the retirement age of State government employees from 60 to 65. I strongly suspect that the Seventh Pay Commission would see the justification of revising the retirement age upwards and make its evidence-based recommendation to the government.

Vol. 8 | Issue 9 | December 2014

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