Will a higher retirement age change the game?

Vivek Ananth BL Research Bureau | Updated on July 04, 2019 Published on July 04, 2019

With an increasing life expectancy due to better health facilities, the survey said that the retirement age should also be increased   -  PeopleImages

The Survey 2019 has suggested that the government should increase the retirement age from the current 60 years. Although the survey did not say what the new threshold should be, it refers to pensionable age reforms being undertaken in Germany, USA, UK, Australia, China and Japan that are gradually increasing their retirement age; in the case of Japan it is moving from around 66 years to nearly 70 years. These countries, however, have a dwindling young population.

On the face of it, the survey points to a higher pension bill for the Centre with a higher proportion of the population ageing over the next two decades. By the end of next decade, India will overtake China as the world’s most populous country.

At the same time the proportion of people above 60 years of age will also increase. With an increasing life expectancy due to better health facilities, the survey said that the retirement age should also be increased. It estimates that the proportion of population above 60 years will inch up to 16 per cent of India’s total population (1.51 billion) by 2041.

“From a personal finance point of view, you will have a longer time to save for a retirement corpus,” said Rohit Shah, a financial planner and founder and CEO of Mumbai-based Getting You Rich. “This means that we will have to recalibrate the retirement plan and the savings that you need will be lower.” PV Subramanyam, a financial advisor of, said, “the Centre could tweak the income tax slabs to exempt a higher threshold of income of those over 60 years or give a predetermined standard deduction to those above a certain age threshold.”

Limited impact

The Survey said when the eventual move to a higher retirement age does come to pass, the Centre should announce the change a decade in advance. This would help the workforce to be prepared for the shift, and give them more time to plan for their pension needs.

“This would only impact a small proportion of the workforce though,” said Deepesh Raghaw of PersonalFinancePlan, an investment advisor. “The government is not a huge employment generator nowadays, so the impact of this move will be limited only to government employees. Private companies have their own rules for their employees with respect to retirement age.”

However, financial advisors caution that the impact of such a move on the Centre’s finances itself might be limited considering that it has moved to a defined contribution plan under the National Pension System (NPS) for all employees who have joined from 2004.

Here the employees contribute to their retirement corpus. Many State governments have also moved their employees to the NPS. How far will this move help shore up government finances is unclear as the Survey didn’t give any estimates.

Published on July 04, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.