The Employees’ Provident Fund Organisation (EPFO) sees a case for substantially increasing the retirement age and aligning it with life expectancy. This is aimed at making the pension system viable within the country and supply sufficient retirement advantages, The Economic Times reported
India is projected to turn into an ageing society by 2047 with an estimated 140 million individuals above the age of 60 years. This is predicted to put immense pressure on the pension funds within the nation, according to the report.
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“Increasing the retirement age, going forward, could be considered in line with the experience of other countries and will be key to the viability of pension systems,” EPFO stated in its Vision 2047 doc.
“Raising the retirement age would mean deposit of higher quantum pensions for longer duration with EPFO and other pension funds in the country and will help offset inflation,” a senior authorities official told ET.
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Retirement fund body EPFO is the custodian of a cumulative pension and provident fund corpus of over Rs 12 lakh crore of its almost 60 million subscribers.
Reportedly, the EPFO is probably going to rope within the Pension Fund Regulatory and Development Authority, which administers the National Pension Scheme of the federal government, on this complete plan.
Labour economist KR Shyam Sundar told ET that the transfer can have combined influence. “It will ensure that the family income of aged workers sustain the aggregate demand and provide growth impetus, while also saving the age discrimination present in the labour market today,” he stated.
“But on a net basis, raising the retirement age in a demand constrained economy may not prove to be efficient and equitable as it will keep the youth waiting for a longer period to get a job and there will be skill wastage,” Sundar added.
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India’s aged inhabitants (aged 60 and above) is projected to contact 194 million in 2031 from 138 million in 2021, a 41 per cent enhance over a decade lifted by a better inhabitants and rise in life expectancy for each men and women in accordance to the National Statistical Office (NSO)’s Elderly in India 2021 Report.
The above report also states that as per the Report of the Technical Group on Population Projections for India and States 2011-2036, an increase of nearly 34 million elderly persons was seen in 2021 over the Population Census 2011 and is further expected to increase by around 56 million elderly persons in 2031.
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“Consequently, the number of people requiring old age income and health security will go up exponentially,” EPFO added.
In India, the retirement age varies between 58 to 65 years depending on whether or not it’s a public sector enterprise or a company entity.
However, throughout the European Union, the retirement age is 65 years, whereas it’s 67 in Denmark, Italy and Greece, and 66 within the US.
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The Organisation for Economic Cooperation and Development in the 2012 version of its ‘Pension Outlook‘ stated governments will want to elevate retirement ages regularly to tackle rising life expectancy so as to be certain that their nationwide pension programs are each reasonably priced and sufficient.
In June this year, EPFO added 18.36 lakh new subscribers, registering 43 per cent rise as compared to the year-ago period, according to an official data. The Employees’ Provident Fund Organisation (EPFO) had added 12.83 lakh net new subscribers in June 2021, the data showed.
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EPFO is one of the two main statutory social security bodies under the Government of India’s Ministry of Labour and Employment and is responsible for regulation and management of provident funds in India.
