Committee recommends raising retirement age in private sector to 60
06 September 2010
A government-appointed expert committee on pension reforms has recommended raising the retirement age in private sector to 60 years, a move fraught with considerable repercussions for employment plans and post-retirement benefits.
The recommendation comes as part of a package of changes suggested to Employment Pension Scheme- 1995, including raising retirement pension to a minimum of Rs1,000 from a measly Rs350-400 and raising the wage ceiling for EPS to Rs10,000 from Rs6,500 in keeping with the need to better reflect the real worth of money.
According to analysts, while the recommendation is only meant for those covered under EPS, it can be a trendsetter for raising the retirement age across-the-board.
According to the committee the government could switch to a new PF-cum-pension annuity scheme instead of the EPS or make suitable amendments to it.
EPS, which caters to 4.5 crore employees, was formed to allow for 8.33 per cent contribution to PF from employer and 1.16 per cent from government. The scheme is running a deficit of Rs69,834 crore and the panel was asked to suggest measures for making the scheme sustainable.
The committed appointed by the centre has said that only sustainable way to fix the scheme's problems is to scrap it altogether and substitute it with a new provident fund-cum-annuity scheme.