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Should India consider raising the retirement age?

India is preparing to face the challenges of rising elderly population. Its largest retirement fund EPFO recently backed the idea of raising the retirement age in line with western countries to deal w

retirement age | Aging population | Retirement savings

Akash Podishetty  |  New Delhi 

Columbia Pacific Communities, people, old, senior citizens, elder, health


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By the end of 1952, when the Employees’ Provident Funds Act came into being, the average life expectancy of Indians was somewhere close to 40 years. Over 70 winters later, it is about 70 years now.

And, with increased access to healthcare and better living conditions, the average age of Indians is likely to hit 80 in the next few years.

While it is good that people are living longer, it is posing a few challenges before the government—which will have to spend more on social security and public welfare systems.

It is against this backdrop that the Employee Provident Fund Organization or has called for raising the .

According to reports, the retirement fund body in its vision document argued for aligning the with life expectancy. The rationale here is that, as life expectancy increases, in combination with lower fertility rates, the share of elderly population will continue to rise.

The Central government spent nearly Rs 1.98 trillion for pension and related payments in FY22

According to a National Statistics Office report, the share of elderly in the total population is projected to reach nearly 15% by 2036. This means more people will be eligible for pension benefits and for a longer duration of time, putting additional burden on the state’s exchequer and liability on pension funds. The Central government spent nearly Rs 1.98 trillion for pension and related payments in FY22.

All these factors stress on the need to prepare for an ageing population.

The Economic Survey 2018-19 too had floated the idea of increasing the . The survey said, given that life expectancy for both males and females in India is likely to continue rising, increasing the retirement age for both men and women going forward could be considered in line with the experience of other countries.

Globally too, countries are mulling or have already raised retirement ages as a convenient and logical measure to cope up with an ageing population.

In the US, the pension benefit age is set to rise gradually to reach 67 for those born in 1960 or later. In the UK, the state pension age is set to increase for men and women to 67 between 2026 and 2028. In countries like Denmark, Portugal and Italy, the retirement age is already linked to life expectancy. Germany is debating whether to increase the retirement age to 70. China has also confirmed that it will gradually delay its long-mandated retirement ages in the coming years.

The official retirement age in India varies from 58 to 65 years, depending on public or private enterprise. In 2017, the government had increased the retirement age of central government doctors to better utilise the services of experienced doctors.

So, should India consider raising the retirement age for other services as well?

Santosh Mehrotra, Visiting Professor, Centre for Development Studies, University of Bath, UK and Research Fellow, IZA Institute of Labour Economics, Bonn, says India has more informal workers. Barely 9% have access have EPFO-type benefits. Shouldn't we be thinking of increasing the share of the workforce that gets social benefits, he asks. India should ponder on how to formalise the workforce with social benefits, he says.

Another view is that delaying the retirement age will restrict the employment of younger workforce. This is based on the assumption that the number of jobs is fixed. According to a report in the ORF, examples of Japan and Singapore can be considered that have better managed such situations by creating re-employment after retirement, with different working hours and wages similar to part-time employment. Some jobs can be more demanding than others. For example, police or fire personnel might feel stressed working beyond a certain age, while physician doctors could work longer.

Experts say raising the retirement age is only a part of the solution to prepare for an ageing population. Creating more formal jobs and increasing the share of employees under the social net are the need of the hour.

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First Published: Thu, September 08 2022. 15:18 IST