Wednesday, August 12, 2009

Raising retirement to 62 for Central Govt. Employees ? May be announced on Independence day.

Update on 28.11.09 : No raise in Retirement age - Govt.

Prime Minister Manmohan Singh is keen on extending the retirement age of civil servants to 62, one of his aides told this columnist in Delhi recently. He had apparently been keen to do so earlier this year, but such a change was thought politically risky at a time when the Congress party was using Rahul Gandhi’s youth as its electoral strategy (how do you convince voters that the party is going to harness the energy of the youth if you propose to keep all the old babus for another two years?). It may seem unreal now, but back then many in government feared that the Congress might lose power (even national security advisor M K Narayanan apparently threw a farewell party!), so the PM’s plan was shelved. It is being revived again, with the PM himself taking great interest.This proposal has two justifications. First and foremost is fiscal. As had happened when the retirement age was raised from 58 to 60 in 1998, the expenditure on pensions would be curbed. In this year’s budget, finance minister Pranab Mukherjee earmarked non-Plan expenditure for pensions at Rs 25,085.49 crore. That is a growth of almost 40 per cent (39.4 per cent). It is a major contributor to the total spending that was announced by Pranab, a little over Rs 10 trillion, a hike of around 36 per cent from last year. Of course, coming at the time of a global economic slowdown this massive expenditure is possibly a good risk to take; but the prime minister is obviously looking for ways to keep costs from running away.Of course, worse than the central finances are those of many of the States; their governments are far more reckless than the Centre’s. In the decade after New Delhi raised the age of superannuation to 60, the States slowly but surely followed suit. The States would likely follow the Centre’s lead again and that would help them manage their fiscal problems.The other reason the PM wants to push retirement back another two years is that he wants to make tap the valuable human resource that bureaucrats represent. For one thing, life expectancy in India has gone up. According to UNICEF, in 2007 it was 64 years, and this is a figure that the average bureaucrat would have pulled upwards. Thus, when a civil servant retires at 60, she or he is still at their mental peak, and each acts as an institutional storehouse of government policy and programme implementation. Retaining them for another two years would possibly enrich functioning of the government. At the very least, it would keep some of the hypocrites off the boob tube — it’s very bizarre that the same bureaucrats who set government policy for 30 years or so, start abusing the government at the nearest TV station studio the moment they find themselves jobless. (Maybe it’s their pique at not getting a post-retirement sinecure).The PM is not the first person to have such a brainwave. Almost a year ago, the University Grants Commission appointed a committee under G K Chadha to study pay revision, and he made a suggestion that teachers’ retirement age be raised to 65. This is timely advice considering that India is currently set to expand education in a major way under the stewardship of the dynamic Kapil Sibal. It is not just a matter of filling the ranks of teachers, but imparting quality teaching to India’s children.If the PM wants to extend the retirement age then he would only be following a global trend. The retirement age in the US is 65; in Japan it is 60 and the government is gradually raising it to 65 by 2013, but people anyway continue working till 65 on reduced wages. By 2033, Austria’s retirement age will be 65. In Denmark it will be 67 years by 2027. Hungary plans to make it 69 years by 2050. Israel is already raising it to 67 years for men. All these countries and many others are increasing the retirement age because of an increasingly alarming problem — their ageing populations. By 2020, a quarter of Japan’s population will be 65 and over. Life expectancy in the US is about 77, and by 2050 is expected to go up to 83. Japan’s is already 82.4 years. Indeed, the life expectancy in some of the advanced countries, according to 2009 OECD data, are: France 80.9 years, Canada 80.4 years, Sweden 80.8 years, Italy 80.9 years and Spain 81.1 years. You would have to think that as India gets wealthier — which it undoubtedly is — our population’s life expectancy will similarly increase.Imagine a person retiring at 60, but living till at least 80 (if not more), perhaps physically weakened as she or he passes 75, but still mentally at the top of his or her game. What do they do with such a long retirement? And besides the fact that the increase in life expectancy leaves retirees with too much time on their hands and their skills unutilised, it also places a great burden on the working population, which has to finance the social security and health benefits that the elderly need. In the West it costs much more to maintain an elderly person than it does to raise a child; and health care costs in the rich world are projected to be those countries’ biggest finance headache (much more than the costs of the stimulus to end the current economic crisis). Thus it is not surprising that there are an increasing number of voices in the West and Japan who are talking of increasing the retirement age to 75. Doing so would engage the older citizens, contribute to the state exchequer in terms of taxes from older workers, and reduce the social security burden on the young. It is a surprisingly obvious solution.With the PM politically on the defensive after the all-round criticism of his joint statement with his Pakistani counterpart at Sharm-el-Sheikh, it is unclear when he may undertake the change in retirement age, though he is said to be very enthusiastic about it. Sharm-el-Sheikh will pass however; party boss Sonia Gandhi can manage the naysayers in the Congress, and the BJP is still shell-shocked from its electoral defeat to do serious damage to the government. And even within the BJP it is thought that currently the coming assembly elections in Maharashtra favour the Congress. Manmohan Singh will soon enough have the political wind at his back to make this proposal. Good thing, for it is an eminently sensible one.

Source : Column of Sri Aditya Sinha for express buzz.


Announcement on Independence Day ?

The government is actively considering raising the retirement age of all central government employees, including those in the armed forces, from the present 60 to 62 years.

Finance Minister Pranab Mukherjee has submitted a report to the prime minister outlining all the pros and cons of the move, including the “cascading effects” on government employment and the huge savings, at least for two years, on account of retirement payouts.

If the Department of Personnel and Training (DoPT) and the prime minister find the arguments forwarded by the finance ministry credible and convincing, the announcement may come as early as August 15, as part of Manmohan Singh’s Independence Day speech.

The Cabinet may discuss the matter tomorrow.

Although the finance ministry is making a strong case for the move, the DoPT is taking time to make up its mind, possibly out of consideration for the 1979 batch of the Indian Administrative Service (IAS) and other central services. Officers of the 1979 batch have been empanelled for promotion to the ranks of additional secretary and secretary but can take up their posts only after the present incumbents retire. If an announcement extending the retirement age comes before November, a batch of empanelled joint secretaries stand to lose their future ranks. In turn, this will also affect those who joined the central administrative services in 1980. The DoPT also says that the age profile of Indian bureaucrats, instead of becoming younger, will become older, out of tune with the rest of the world.

For the finance ministry, the gains from the move are clear. The pension payout of all armed forces personnel of the rank of Lieutenant General and equivalent who were to retire this year will be postponed by 24 months; the government will also defer by two years the liability of paying pension to more than 100,000 employees. While salaries will have to continue to be paid, this will be cheaper than paying upfront benefits like gratuity.

This is all the more important given the government’s other financial liabilities on account of stimulus spending and one drought, though the effects of the latter will kick in only in the next fiscal year. The fiscal deficit is 6.8 per cent of gross domestic product this year and a two-year lag in paying pensions will help in bridging this.

In 1998, the National Democratic Alliance government had raised the retirement age from 58 to 60, a move that benefitted 90,000 government servants and 50,000 defence personnel. At the time, the logic was: the retirement of 140,000 employees would have cost Rs 5,200 crore whereas paying salaries cost only Rs 1,493 crore.

That move came in the wake of the 5th Pay Commission report which had just been implemented by the then United Front government. In 2003, the government also right-sized the central government employee workforce by 30 per cent.

Every time the Centre announces an increase or concession on pay packages, both public-sector units and state governments follow suit. If the prime minister does decide to raise the retirement age, state governments and Public Sector Units (PSUs) will mirror this action. This has its own implications for many cash-strapped states like Punjab.

If the decision is finally taken, it will only be the third time the government will have raised the retirement age. Jawaharlal Nehru was the first prime minister to have increased the age of superannuation from 55 to 58 following the 1962 war with China. The Atal Bihari Vajpayee government did it a second time in 1998.

Source : Business Standard.

Update : As per own source, an announcement may be made in this regard in the month of November,09. Please note that there is no confirmation yet.

10 comments:

Narender said...

It does not reduce cost but defer it with higher costs later on

1. Higher interest payout on GPF for two years

2. Higher pension once employee drawl increases ( 50% of last emoulments)

3.India has huge population , wages should be kept in permissible limits with more and more employement opportunities .

4. Higher crime rate on account of lesser opportunities .

sreenu said...

Raising the superannuation age from 60 to 62 for the central government,railways and armed personnel would certainly deprive the youth of their legitimate right and opportunity for due jobs. Raising the age factor from 58 to 60 itself is a curse to the youth who aspire government jobs. Further raising is a bolt on the youth. Joblessness begets criminals and anti-social elements. Governdment should consider dropping the proposal.

sreenu said...

full address of "Sreenu" the author of the above comment (dated and timed as Aug 21, 2009, 1104 PM is " P.Ramachandra Rao, Retired BSNL Executive, 50-83-4/8, Keerthana Enclave, Madhuranagar, Vizag 530016
{Ph. 0891-2554167, Mob 9849321303)
email id prrao1945@gmail.com

somenath said...

whatever is the decision of rising the age of retirement from 60 to 62 is a very wise decision taken by the Congress Govt. i appreciate this. people working in govt sectors for so many long years can get another 2 years time to make arrangements after their retirement. i appreciate this decision and vote for the wise decision by the Congress Govt.

pradhan said...

Govt is taking decision retirement age to 62, I think there should be one more uniform retirement date is 31st December in the following aspect on behalf of retirement age to 62 : D.A. & increment uniform date are Jan/July & July every year. If pensioners are retirement date is 31st December, all their financial matter will be cleared before their retirement date 31st December and they will get their first pension in hand in time with any dispute/query of their accounts because their is maximum time to clear their accounts to the office as D.A. & Increment adjusted before September every year. So I think and hope Govt should also consider this matter with this proposal as now crisis with great economics troubles.

Sudarsan Pradhan

pradhan said...

Govt is taking decision retirement age to 62, I think there should be one more uniform retirement date is 31st December in the following aspect on behalf of retirement age to 62 : D.A. & increment uniform date are Jan/July & July every year. If pensioners are retirement date is 31st December, all their financial matter will be cleared before their retirement date 31st December and they will get their first pension in hand in time with any dispute/query (Leave encashment, gratuity, Fixation of pension, commutation and others) of their accounts because their is maximum time to clear their accounts to the office as D.A. & Increment adjusted before September every year. So I think and hope Govt should think and consider this matter with this proposal as now crisis with great economics troubles in the country

dayasagr said...

*Some are trying to sell the logic that increase in retirement age would make available to government valuable human resources that lie in senior bureaucrats ( IAS / IAAS /Others ). In case this logic is accepted , still the question is why raise the age for all including the peons and clerks. Let it be for “extraordinary” personnel only. There has already been a practice of some civil servants getting either extension or post retirement full-time assignments..At occasions even some useful lower level employees too are given extension/ reappointed. Union Cabinet, Home and Defence Secretaries get minimum two-year fixed tenure. K M Chandrasekhar 1970 batch IAS completed his two-year tenure as Cabinet Secretary in June, 2009, but got one year’s extension.
(i) Many inefficient & those who had faced administrative actions too get benefitted with increased retirement age. Logic of benefit of expertise does not stand.
(ii) Where ever it is felt that a Government employee has sound health, special useful tried experience , commendable service record of benefit inspite of reduced agility , he could be appointed on contract basis/ extension. Increase in retirement age for all may cause more loss to the state exchequer & the youth.
*At some places job requirements do ask for physical fitness and vigour, like in armed forces. In armed forces at lower levels the retirement age is even around 40 years. One day demands may come up for keeping uniform retirement age for armed forces as well. Similarly all in civil police too can not be uniformly given the superannuation age of even 6O .
*Increasing life expectancy too is being quoted in support of increasing the retirement age . But the increased life span does not convey that the health and mental agility of people beyond 50 Yrs too would be sustained even at normal levels to meet the needs of growing levels of technology, development, crime and economic activity. Will not with the increase in retirement age the percentage of ill senior citizens employed in government workforce increase considerably ? All the aged employees would not be that fit physically and mentally so their proportional input would be less. Productivity & quality of service would be affected, particularly in rural/ backward area / security services
(i) Yes, they could be engaged for some jobs on contract basis and at reduced wages so that they are supported.
(ii) Pension discontinued for GOI employees appointed from Jan2004 & J&K Government employees appointed wef 1 Jan 2010.But still many of those retiring upto 2042 from GOI would be getting pension.
(iii) Since “ no pension” policy did not affect those Senior officers who were already in service & in service union leaders no representations were made nor any advice for not discontinuing pension was given to political bosses though action was not that wise considering social responsibility that government servant has to carry &shoulder. A government employee has to keep a check on criminals, law breakers and economic offenders. He has to collect the state revenue & see that expenditure made by government is neither misused nor corrupted .He has to be kept away from the material allurements. So GOI should better still reconsider restoring provision of pension for new appointees.
* Daya Sagar:a Sr coloumnist of Kashmir affairs and a social activist dayasagr45@yahoo.com)

dayasagr said...

*Some are trying to sell the logic that increase in retirement age would make available to government valuable human resources that lie in senior bureaucrats ( IAS / IAAS /Others ). In case this logic is accepted , still the question is why raise the age for all including the peons and clerks. Let it be for “extraordinary” personnel only. There has already been a practice of some civil servants getting either extension or post retirement full-time assignments..At occasions even some useful lower level employees too are given extension/ reappointed. Union Cabinet, Home and Defence Secretaries get minimum two-year fixed tenure. K M Chandrasekhar 1970 batch IAS completed his two-year tenure as Cabinet Secretary in June, 2009, but got one year’s extension.
(i) Many inefficient & those who had faced administrative actions too get benefitted with increased retirement age. Logic of benefit of expertise does not stand.
(ii) Where ever it is felt that a Government employee has sound health, special useful tried experience , commendable service record of benefit inspite of reduced agility , he could be appointed on contract basis/ extension. Increase in retirement age for all may cause more loss to the state exchequer & the youth.
*At some places job requirements do ask for physical fitness and vigour, like in armed forces. In armed forces at lower levels the retirement age is even around 40 years. One day demands may come up for keeping uniform retirement age for armed forces as well. Similarly all in civil police too can not be uniformly given the superannuation age of even 6O .
*Increasing life expectancy too is being quoted in support of increasing the retirement age . But the increased life span does not convey that the health and mental agility of people beyond 50 Yrs too would be sustained even at normal levels to meet the needs of growing levels of technology, development, crime and economic activity. Will not with the increase in retirement age the percentage of ill senior citizens employed in government workforce increase considerably ? All the aged employees would not be that fit physically and mentally so their proportional input would be less. Productivity & quality of service would be affected, particularly in rural/ backward area / security services
(i) Yes, they could be engaged for some jobs on contract basis and at reduced wages so that they are supported.
(ii) Pension discontinued for GOI employees appointed from Jan2004 & J&K Government employees appointed wef 1 Jan 2010.But still many of those retiring upto 2042 from GOI would be getting pension.
(iii) Since “ no pension” policy did not affect those Senior officers who were already in service & in service union leaders no representations were made nor any advice for not discontinuing pension was given to political bosses though action was not that wise considering social responsibility that government servant has to carry &shoulder. A government employee has to keep a check on criminals, law breakers and economic offenders. He has to collect the state revenue & see that expenditure made by government is neither misused nor corrupted .He has to be kept away from the material allurements. So GOI should better still reconsider restoring provision of pension for new appointees.
* Daya Sagar:a Sr coloumnist of Kashmir affairs and a social activist dayasagr45@yahoo.com)

dayasagr said...

A Look Through the mist
All Aged Government employees may not be that prepared to face challenges & stand to Political Pressures:*Daya Sagar
Government employees of some Indian states are demanding retirement age be raised from 58 yr to 60 years where as the proposals are also live for raising the retirement age of the Central Government employees from 60Yrs to 62 ( raised in 1998) . In the state of Kerala the retirement age for Government Employees is still 55 yrs .Anyhow the Kerala Government employees attaining the date of retirement in April 2009 or any day during the financial year were allowed to work upto 31 mar 2010. Under the circumstances prevailing some have suggested to even reduce the retirement age below 58 Yrs.
The proposals on the wage increase and retirement age increase appear more supported by the government employees sitting in the senior positions ( even IAS ) ( from behind the screen).The reasons being quoted like deferring the burden of superannuation payments for year or two are only cooked props.Under the conditions prevailing the notice need be taken of the following :
* Government service is need based & not only for giving only employment appears to have been forgotten.
*A uniform retirement age for a particular class of service should be there for all government employees in India.( State or Center ). Provincial Service employees & Central services employees are not different classes of human beings. Every time the Centre announces an increase or on pay packages / raising retirement age , both public-sector units & state government employees too demand and strike work.Then center bears their cost also.
*This day, people in general, have lost faith in the trueness of the government employees ( revenue matters, government schools, social/ material security infrastructure, government health institutions, collection state revenue / expenditure of state funds, and like) & efficiency of the government employees on the whole is often questioned Common mans has lost faith even in the vigilance departments.
(i) While nearing retirement, most of the government employees are seen more concerned about securing their self materially after retirement and do not rate the social duty as priority one..
(ii) So the aged employees may not be that prepared to face challenges and stand to Political Pressures.
(iii) After 50 plus they discuss more of their family/ politics .It has been observed that “elder technocrats “ prefer taking only routine work.
(iv) Most of the Senior / Secretary officers level officers are often posted in Commissions, tribunals and committees after retirement . But even these commissions enjoy very less confidence of common man. .
* The VIth Pay Commission recommendations talked of performance related benefits. But only Wage increase was implemented for Central Government Employees ( later by Sate Governments ) & not the performance related conditions /recommendations. Why did the “Superior Bureaucracy”who hold all key decision making & recommending position both in Central and State Governments not get the performance conditions linked with benefits implemented or advise the Ministry accordingly, could be asked.
*The working information & support staff to Pay Commissions / review committees / acceptance process is generally out of government employees & so performance conditions could be pushed under the carpet. * Daya Sagar:Sr coloumnist of Kashmir affairs and a social activist dayasagr45@yahoo.com)...contd

n said...

whatever is the decision of rising the age of retirement from 60 to 62 is a very wise decision taken by the Congress Govt. i appreciate this. people working in govt sectors for so many long years can get another 2 years time to make arrangements after their retirement. i appreciate this decision and vote for the wise decision by the Congress Govt

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