The Employees’ Provident Fund Organisation (EPFO) has considered increasing the retirement age in India and aligning it with life expectancy to provide adequate retirement benefits and the viability of pension systems in India.
India is expected to become an ageing society by 2047 since an estimated 140 million people are above 60 years old. It can put immense pressure on the pension funds in India. The EPFO, in its Vision 2047 document, stated that increasing the retirement age could be considered in the same lines of experience of other countries and would be crucial to the viability of pension systems.
A senior government official, explaining the suggestion by the EPFO, told The Economic Times that raising the retirement age would mean higher quantum pensions deposit for a longer duration with EPFO and other pension funds and would help offset inflation.
The EPFO Vision document is shared with the states, and discussions will start soon with other stakeholders, including the employees and employers. The EPFO has around 60 million subscribers and has a cumulative pension and provident fund corpus exceeding Rs.12 trillion. The EPFO will likely include the Pension Fund Regulatory and Development Authority (PFRDA) in its plan. The PFRDA administers the National Pension Scheme (NPS) of the central government.
There is a projection that India’s elderly population, i.e. people aged 60 years and above, would touch 194 million in 2031 from 138 million in 2021. There would be about a 41% increase in the elderly population by 20131 due to a rise in life expectancy and a higher population for both men and women, according to the National Statistical Office (NSO) Elderly in India 2021 Report.
The retirement age in India varies between 58 to 65 years, depending on whether it is a corporate entity or a public sector enterprise. However, across the European Union, 65 years is the retirement age, while it is 67 in Denmark, Greece and Italy and 66 in the US.
The Organisation for Economic Cooperation and Development (OECD), in the 2012 edition of its ‘Pension Outlook’, stated that the governments would need to increase retirement ages gradually to address the rise in life expectancy and to ensure that their national pension systems are both adequate and affordable.
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